THE EUROPEAN CENTRAL BANKS’ RESPONSE TO THE COVID-19 PANDEMIC

Abstract

This paper provides a comprehensive analysis of the measures implemented by the European Central Bank (ECB) in response to the crisis triggered by the COVID-19 pandemic, with a particular focus on their effects on the economies of the eurozone. The research examines key monetary interventions, including the Pandemic Emergency Purchase Programme (PEPP), the expansion of asset purchase programs, interest rate reductions, Targeted Long-Term Refinancing Operations (TLTRO), and the regulatory relief measures. The aim of the paper is to assess the impact of these measures on lowering borrowing costs, stimulating economic recovery, and maintaining liquidity within the eurozone's financial system. Additionally, the paper addresses the challenges ECB faced in the post-crisis period, such as rising inflation and disruptions in global supply chains, with an emphasis on monetary policy adjustments through the gradual reduction of the PEPP and interest rate hikes. The results indicate that the ECB played a pivotal role in preventing a deepening recession and stabilizing economic activity in the eurozone.