There is a summary of the results of the survey for the participating Spanish banks in Menéndez-Pujadas, Á. and M. Mulino (2020), “October 2020 Bank Lending Survey”, Analytical Articles, Economic Bulletin, 4/2020, Banco de España. 3  Secondly, the comprehensive nature of the monetary policy response has also been very important. It should be borne in mind that the COVID-19 outbreak in the euro area came about against a background of: low inflation and extensive monetary stimulus, with benchmark interest rates at a record low of -0.5%; net asset purchases under the asset purchase programme (APP); and a set timetable for the TLTROs. In this setting, the ECB measures have run along two main axes: the purchase of financial assets and the provision of liquidity to commercial banks, covering the euro area economy’s main financing channels. As regards asset purchases, I have already referred to the approval of the PEPP. The main aim of this programme is to ease financing conditions and ensure the smooth transmission of the common monetary policy to all euro area countries. As to liquidity provision, we should recall that, in the euro area, banks are the main source of financing for households, the self-employed and firms. It was therefore vital to head off a severe contraction in the flow of credit to the real economy.
Thirdly, the importance of the ECB’s flexibility as regards the recalibration and use of instruments should be highlighted. By way of illustration, the evolution of the economic crisis caused by the pandemic required an increase in the PEPP in June of € billion, and of € billion in December, up to a total of € trillion. The net purchase horizon was also extended until at least end-March 2022 and the maturing securities reinvestment horizon until at least end-2023. 4  In December we also decided to recalibrate the conditions of the TLTROs. We extended by 12 months, until June 2022, the period during which the reduced interest rate for banks meeting the lending target will be applicable, scheduling three additional quarterly operations between June and December 2021, and increasing the borrowing allowance of TLTRO funds each bank can obtain from 50% to 55% of its eligible loans. Another of our decisions was to extend until June 2022 the aforementioned collateral framework flexibility measures. But apart from this flexibility in the response over time, there is a key difference in the PEPP compared with the previous asset purchase programme (APP). Whereas the APP retains a relatively rigid structure regarding the distribution of asset purchases both over time and across jurisdictions, the PEPP afforded itself from the outset the possibility of concentrating these purchases in the most critical months of the crisis and in the countries which, at each point in time, have been subject to tighter financing conditions.