These measures were in the right direction and alleviated the short-term pressure on the liquidity and capital positions of banks. However, according to the experience from past crises, such an acute economic recession is highly probable to impair the asset quality of lenders.
Today, just a few months after the lockdown, it is still too early to assess the impact from the pandemic on European banks, for several reasons: 1. First, there is still uncertainty about the medical factor, while there is a wide range of projections for economic activity, a key determinant of banks’ credit losses. 2.