On the EU front, the EC recently adopted “Temporary Framework” allows for the use of state aid through liquidity recapitalization (state guarantees on ELA, guarantees on GGBBs), precautionary recapitalization or impaired asset relief measures (creation of public AMCs) without any burden sharing requirements (bail in). The objective of such aid would be solely to address Covid-19 related losses.
Accordingly, some have proposed a related framework that could better harness the power of expectations in getting these economies back on track right now – nominal GDP level targeting.