Vasle says eurozone financial markets remain stable

Ljubljana – The situation on eurozone financial markets remains stable despite the challenges brought about by the Covid-19 pandemic, mainly thanks to the support of the monetary policy and optimism related to vaccination, Banka Slovenije Governor Boštjan Vasle said after Thursday’s session of the Governing Council of the European Central Bank (ECB).

“In the demanding situation of the pandemic, the economic situation in eurozone countries, including Slovenia, remains tough,” Vasle noted though.

While in the first wave industry was strongly affected too, in the second mainly the services sector has been hit, he said.

The ECB council decided yesterday to keep the supportive monetary policy. “Thus we will continue to make sure all sectors receive loans, which will provide support to the economic activity and in the mid-term guarantee stability of prices,” Vasle stressed.

He reiterated that members of the council were ready to take additional monetary policy measures if this proved necessary.

In Slovenia, the epidemiological situation remains tough, hence restrictive measures, which caused another drop in economic activity in the final quarter of 2020, must remain in place, Vasle said.

The financial markets, receiving support through the monetary policy adopted by the council throughout last year, remain stable. “In Slovenia too, the conditions for borrowing of the state have improved and Slovenian banks are able to preserve favourable loan terms for companies and citizens,” the governor said.

Optimism at the start of the Covid-19 vaccine distribution additionally contributed to a peaceful transition into new year on financial markets.

Yield to maturity in many investment categories has not only reached pre-pandemic levels but is record low. But risks remain, including regarding the future course of the health crisis.

Substantial monetary policy measures have also improved Slovenia’s conditions for borrowing and in January the country issued a ten-year bond with a negative yield to maturity for the first time ever, Vasle noted.