Monetary and fiscal policy in the face of Covid-19

The Covid-19 pandemic has plunged economies all over the world into crisis. Governments responded promptly, rolling out large-scale fiscal support. As a result, sovereign debt in the euro area is expected to rise substantially. Moreover, joint long-term debt raises fundamental questions about the fiscal framework of the European Union. The Eurosystem has adopted a range of crisis measures, making an important contribution to economic stabilisation. However, extensive purchases of sovereign bonds come with risks, particularly that of blurring the line between monetary and fiscal policy. Jens Weidmann, president of the Deutsche Bundesbank, discusses recent developments in monetary policy.