Second lockdown less of an economic blow, DNB president says
The economic damage caused by the second coronavirus lockdown is less severe than that of the first lockdown, because companies and employees in euro countries could more easily adapt to the tightened rules than in the spring, Klaas Knot, president of Dutch central bank DNB, said in an interview with Bloomberg. According to him, "we've all had a crash course in digitization".
The second round of lockdowns throughout Europe definitely harmed economies, but less so than the first time lockdown was implemented because many parts of the economy were able to adapt, Knot said. People are now more familiar with digital tools for working from home, and businesses are more comfortable with letting their employees do so. "It shows the flexibility of the economy," he said.
Last year, the European Central Bank (ECB) set up a massive stimulus program to prevent a pandemic-triggered recession. The bank bought up loans to keep interest rates low, in the hopes to keep people spending. Knot, who is also a board member at ECB, is worried that these low interest rates will cause financial bubbles. The negative side effects of the low interest rates need to be critically examined, but at a later date, according to him.
"I am concerned about the side effects of the monetary policy. But in times of crisis, there is little we can do about the interaction. We always keep an eye on whether the policy is proportional," he said.
