This paper was prepared for the European Parliament’s Committee on Economic and Monetary Affairs (ECON). This in-depth analysis is available on the European Parliament’s online database, ‘ThinkTank‘. Copyright remains with the European Parliament at all times.
This paper examines regulatory measures and supervisory practices that have supported public guarantee schemes and moratoria in euro-area countries. The focus is on flexibility shown with regard to default classifications, accounting practices and the treatment of non-performing loans. The paper identifies a number of undesirable effects and examines how soon such policies can be normalised.
This document was provided by the Economic Governance Support Unit at the request of the ECON Committee of the European Parliament, with the research assistance of Klaas Lenaerts.