Covid-19 & Monetary Union – 21


This chapter analyses the Monetary Union post Covid-19. The chapter first focuses on the
European Central Bank’s (ECB) policies to inject cheap liquidity into the banking sector. This
injection was conducted through the Targeted Longer-Term Refinancing Operations (TLTRO) and the Pandemic Emergency Longer-Term Refinancing Operations (PELTRO). This chapter further discusses the ECB’s policies to increase liquidity to the public sector. These include the Pandemic Emergency Purchase Programme (PEPP) and the Transmission Protection Instrument (TPI). The legality of both of these programmes have been questioned. This chapter considers, however, that both programmes abide by the Treaties. In addition, two recent challenges are discussed. The first challenge is the high level of inflation. The second challenge is the introduction of the digital euro. This chapter concludes that the Monetary Union has been impacted by the pandemic crisis in several ways. The ECB has introduced new programmes with willingness to act swiftly and significantly. Nevertheless, some weaknesses remain, such as the strict divide between economic and monetary policy remains challenging for the ECB.