EU financial services regulatory updates during COVID-19

The COVID-19 pandemic has triggered an economic upheaval with workers losing their jobs, restaurants and hotels closing their doors, airline companies grounded as well as consumers and businesses facing steep losses in income. As a result of this, pressures on the banking system started to increase exponentially with a prediction of higher defaults on debt. In this scenario, there is one legitimate question to ask: can banks sustain liquidity levels, especially to SMEs? The International Monetary Fund in its World Economic Outlook warned of a serious threat to the stability of the global financial system if this current situation persists. According to the EC’s recent economic forecast, somewhat dim prospects are ahead with a contraction of the EU economy of 7.7 per cent. Since early March, significant regulatory developments have emerged from the EU Institutions – EC, European Parliament and Council – in the face of the evolving COVID-19 crisis, with detailed EU-wide measures to address both the current safety and future recovery stages. An EU economic safety rescue plan worth €540bn has been devised, aimed at being in place by June 1, to implement a three pillar-plan to...