Banks and investments, not yet safe from the Covid-19 crisis
It is time to make a first count of the economic harm of the pandemic crisis, although not all damage has occurred yet.
Firstly, we have all those companies that, disconnected from the artificial respirators, will definitely set sail and, with their closure, many jobs and much economic activity will be lost. Following those companies that will not be able to survive sixteen or more months of reduced activity, will arrive the growth of delinquency and all the precautions and doubts that an uncertain economic recovery generates in investment and, therefore, in bank credit.
Thus, it is a count of damages still provisional for both companies and banks, but necessary to deal with the planning of the immediate future with enough knowledge and information.
We should be particularly concerned about banks as the main providers in Europe of business finance, and as custodians of a large part of our savings. And about investment, understood as the final destination of all extra savings generated during the Covid-19‘s restrictions which are not going to fill deposits and current accounts that will only destroy our purchasing power.
The economic crisis induced by the Covid-19 pandemic will, sooner or later, reach a banking and financial sector that has accumulated more than a decade of very low or negative interest rates, a regulatory pressure perhaps useful for stability but costly and disruptive, and growing threats of competition, especially coming as a result of digitalisation. For banks, it has meant and is meaning a permanent and lasting threat...