ECB Annual Report 2020

The euro area economy was struck by the extraordinary and severe coronavirus (COVID-19) pandemic shock in 2020. Economic activity contracted sharply during the first half of the year as a consequence of lockdown measures and heightened risk aversion. The strong and coordinated monetary and fiscal policy reaction, combined with positive news on vaccines, helped stabilise activity in the second half of the year. Overall, euro area GDP contracted by 6.6% in 2020. Annual headline inflation declined to 0.3%, from 1.2% in 2019, in large part as a result of falling energy prices, although there were also factors relating to the pandemic. For example, sectors that were hardest hit by the crisis, such as transport and hotels, contributed to the fall in inflation during the second half of the year.

The ECB substantially eased its monetary policy stance to counter the negative impact of the pandemic on the euro area economy, through a comprehensive set of measures that were recalibrated in the course of the year. This included: introducing a new, temporary, pandemic emergency purchase programme; relaxing eligibility and collateral criteria; and offering new longer-term refinancing operations.

The Eurosystem has developed a comprehensive retail payments strategy to harness the innovative potential of digitalisation, focusing on enabling instant payments, developing a pan-European payment solution and investigating the possibility of a digital euro. A public consultation on a digital euro was launched in October 2020 to ensure that any new form of money and payments the Eurosystem may provide would retain the public’s trust.

The ECB enhanced its communication and outreach in 2020 to meet the challenges posed by the pandemic and to better understand the economic concerns and imperatives of European citizens. It also introduced the ECB Blog. 19 posts were published in 2020, with many focusing on the ECB’s response to the crisis. The first ECB Listens event took place in October 2020, and the ECB Listens Portal received almost 4,000 comments on the monetary policy strategy.

 Read here the ECB’s Annual Report.