Covid-19 & Monetary Union

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.