The first step to solving a problem is to make a proper diagnosis and, on that basis, take the necessary measures to resolve it. However, it is very difficult to perform this assessment when the lack of information and uncertainty are very high, either because there is no historical precedent or because learning is done on the fly, at the cost of human lives and almost total economic paralysis.
Despite the fact that at the start of the pandemic, the lack of knowledge about the coronavirus did not allow for a conclusive diagnosis, the gravity of the situation led authorities to take immediate and extraordinary measures, supported by international consensus and cooperation. On a global scale, the fiscal stimulus implemented has exceeded $11 trillion. The monetary expansion developed to stabilize financial markets and provide the liquidity needed by families and businesses through banks has also been exceptional. Banks have been involved from the start, with all their human and financial resources, showing that public-private collaboration is essential to protect the productive fabric and lessen the impact of the crisis on the most vulnerable. From the very beginning, the objective of the measures has been to maintain family income and offer liquidity and financing to companies, under more flexible rules such as the relaxation of deficit targets or public aid at the European level.
The banking sector’s determination to mitigate the effects of the coronavirus has gone far beyond its basic function of guaranteeing necessary banking products and services at all times—something it achieved from the start of the pandemic without any incidents, thanks to the clear commitment to digitalization it undertook more than a decade ago. Banks have also facilitated the deferral of payments for customers in situations of economic stress and have brought forward both pension payments, to reinforce the protection of our elderly, and unemployment benefits, in close collaboration with the SEPE.
The gravity of the situation has also led banks to take measures outside the usual operations of a deposit institution. They have allocated funds to help the most vulnerable people, to facilitate the arrival of medical supplies to hospitals, and to research a vaccine for the disease. Their employees have developed projects as volunteers to raise funds and alleviate the difficulties of children and the elderly, as well as to improve the preparation of young people to find work. But these are just a few examples of the ‘non-banking’ measures taken by banks, the result of their commitment to society in the most difficult times.
With these and other initiatives, the banking sector has confirmed that it is an essential sector for the economy to continue functioning during lockdown and mobility restrictions, and that collaboration with the public sector results in the benefit of society as a whole. International cooperation has also been reinforced in the fight against the pandemic, for example, to obtain vaccines in record time. But the fundamental factor has been the personal responsibility assumed by each of us, according to our possibilities, in order to defeat the virus.
On the health front, we are learning to live with the pandemic responsibly, with social distancing and masks in our daily lives, among other measures. On the economic front, we will also have to maintain the principles that have yielded such good results so far: immediacy, decisiveness, and perseverance in the measures taken. For this strategy to work, it requires the consensus of all agents on an international scale. Such as that demonstrated by Europe with the creation of a joint fund to reinforce the measures taken in each country to achieve sustainable and digital growth. European funds are a significant step in European integration and a mechanism for economic stabilization and development that offer Spain room for maneuver to respond to the crisis and modernize its productive fabric. In their usual and close collaboration with the authorities, banks can contribute to an effective distribution of these funds to boost the reconstruction of the economy. With their widespread presence and proximity to the customer, they can not only identify and promote the projects to be financed, but they can also advance funds and co-finance initiatives in areas where they have knowledge and experience.
The long-awaited end of the health crisis will leave us with an economic situation where the priority will be to recover what was lost, although we cannot go back and nothing will ever be the same again. The information and experience we have, however, allow us to propose a strategy to follow now that we have a conclusive diagnosis of the situation and know what we want. Let us take advantage of the immense challenge of returning to normality by designing a better one than what we enjoyed until Covid-19 disrupted our lives.
José Luis Martínez Campuzano, Spokesperson for the Spanish Banking Association
