Some lessons from COVID-19 for the EU financial framework

Farsighted policymakers must be concerned not only about the present crisis or how to deal with similar ones in the future. Their task is broader: they should think about building "systems" (social, political, infrastructural, financial) that can withstand major unforeseen shocks without fatal or unbearable adverse consequences. This task requires developing plausible scenarios but also safeguards which may be effective against a variety of imponderable circumstances. As we hopefully exit from Covid-19, it may be a good time to reflect on what aspects of the European financial architecture need rethinking in light of these considerations. In the following pages I offer some reflections on this, focused on two areas, monetary policy and financial stability policies. For this purpose, I find it useful to first recall some recent discussions, also inspired by the Covid-19 experience but more general, on how disruptive societal risks should be managed.