The excellent ECB Financial Stability Review, https://t.co/k8HcqpryDF illustrates well the 2 main risks I see for the EA economy next year: possible insufficient fiscal stimulus and weakening of bank credit supply. The FSR mentions “a slightly tighter fiscal stance" in 2021 1/

The FSR correct statement “fiscal tightening at a time when output gaps are still projected to be negative could exacerbate the current economic situation.”, caused some stir and many comments in social media. The same regarding the accompanying chart 2/
The FSR uses the Commission forecasts showing a slight increase of the cyclically-adjusted primary budget balance from -3.2% this year to -2.9% in 2021. 0.3% is a small change not comparable with the mistake of 2012/13 when it went from -0.6% in 2011 to +0.5 & +1.4 in 2012/13 3/
I think the primary balance will end-up higher than those forecasts because families and firms will continue to need a lot of support in the first half of the year. Moreover, growth in 2021 is dependent on public expenditure as other demand components will not be very buoyant. 4/
As the FSR says: “A premature withdrawal of policy support and a protracted pandemic could prolong the recession and have permanent scarring effects.” Besides extending income transfers to families and firms, more public investment is indispensable for a robust recovery 5/
Regarding banks, their problem is lack of profitability, low stock prices abysmal Price-to-Book ratios (chart). Consequently difficulty in raising capital in the market when more will be necessary to absorb further losses from bad loans later on. 6/
More loan losses impacting capital are coming this year, with Governments discontinuing guarantees. The FSR reminds: “Bank capital buffers should remain available to absorb losses for an extended period, and any impediments to banks using buffers should be addressed” 7/
However, the releasable buffers are small and either the markets or the supervisors apparently won´t condone big reductions of capital ratios (see chart). In this case, the end result might be deleveraging and a reduction of credit growth with negative economic consequences 8/
That means that capital and not liquidity will be the operative constraint to credit supply. Still, it will be appropriate to extend TLTRO III allotments until the end of the year, to provide some stimulus to credit supply, especially induced by the rate bonification in place 9/
Bank stocks suffered again this year despite the overall boost provided by monetary policy. This decomposition of stock valuations shows the positive contributions of lower discount rates and dividend/buybacks offsetting the negative effect of earnings and the equity premium 10/
Monetary policy improved the Financial Conditions Index to easing levels above the pre-pandemic times (chart), but this refers only to creating incentives for economic agents increasing real expenditures, which cannot happen significantly in this type of crisis 11/
As the indirect incentives of Monetary policy are showing diminishing returns, only fiscal stimulus in the form of public expenditure with income transfers and investment creates real demand for goods and services to offset the deceleration of private spending. 12/12

More from Finance

** MEGA THREAD ON Cryptocurrencies/Blockchain**

I wanted to know the best resources to learn about cryptocurrencies and blockchain for someone with zero knowledge. I asked Twitter, and Twitter answered.

This thread is a compilation of the best resources I was recommended. 👇👇

Let's start with ** BOOKS **

The first thing you should do before you pick up any book:

Learn about Bitcoin & Ethereum by reading the respective whitepapers.

- [Bitcoin white paper](https://t.co/cErOaFn6QL) by Satoshi Nakamoto

- [Ethereum White paper] (
https://t.co/0g5kYCGJGq) by Vitalik Buterin

Even if you are not tech savvy, you can get a good grasp about how blockchain functions from these papers.

1) *The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology that Powers Them* by Antony Lewis

This book covers topics such as the history of Bitcoin, the Bitcoin blockchain, and Bitcoin buying, selling, and mining.

It also answers how payments are made and how transactions are kept secure.

Other cryptocurrencies and cryptocurrency pricing are examined, answering how one puts a value on cryptocurrencies and digital tokens.

You May Also Like

Department List of UCAS-China PROFESSORs for ANSO, CSC and UCAS (fully or partial) Scholarship Acceptance
1) UCAS School of physical sciences Professor
https://t.co/9X8OheIvRw
2) UCAS School of mathematical sciences Professor

3) UCAS School of nuclear sciences and technology
https://t.co/nQH8JnewcJ
4) UCAS School of astronomy and space sciences
https://t.co/7Ikc6CuKHZ
5) UCAS School of engineering

6) Geotechnical Engineering Teaching and Research Office
https://t.co/jBCJW7UKlQ
7) Multi-scale Mechanics Teaching and Research Section
https://t.co/eqfQnX1LEQ
😎 Microgravity Science Teaching and Research

9) High temperature gas dynamics teaching and research section
https://t.co/tVIdKgTPl3
10) Department of Biomechanics and Medical Engineering
https://t.co/ubW4xhZY2R
11) Ocean Engineering Teaching and Research

12) Department of Dynamics and Advanced Manufacturing
https://t.co/42BKXEugGv
13) Refrigeration and Cryogenic Engineering Teaching and Research Office
https://t.co/pZdUXFTvw3
14) Power Machinery and Engineering Teaching and Research
क्या आप जानते हैं कि क्या है, पितृ पक्ष में कौवे को खाना देने के पीछे का वैज्ञानिक कारण!

श्राद्ध पक्ष में कौओं का बड़ा ही महत्व है। कहते है कौआ यम का प्रतीक है, यदि आपके हाथों दिया गया भोजन ग्रहण कर ले, तो ऐसा माना जाता है कि पितरों की कृपा आपके ऊपर है और वे आपसे ख़ुश है।


कुछ लोग कहते हैं की व्यक्ति मरकर सबसे पहले कौवे के रूप में जन्म लेता है और उसे खाना खिलाने से वह भोजन पितरों को मिलता है

शायद हम सबने अपने घर के किसी बड़े बुज़ुर्ग, किसी पंडित या ज्योतिषाचार्य से ये सुना होगा। वे अनगिनत किस्से सुनाएंगे, कहेंगे बड़े बुज़ुर्ग कह गए इसीलिए ऐसा करना

शायद ही हमें कोई इसके पीछे का वैज्ञानिक कारण बता सके।

हमारे ऋषि मुनि और पौराणिक काल में रहने वाले लोग मुर्ख नहीं थे! कभी सोचियेगा कौवों को पितृ पक्ष में खिलाई खीर हमारे पूर्वजों तक कैसे पहुंचेगी?

हमारे ऋषि मुनि विद्वान थे, वे जो बात करते या कहते थे उसके पीछे कोई न कोई वैज्ञानिक कारण छुपा होता था।

एक बहुत रोचक तथ्य है पितृ पक्ष, भादो( भाद्रपद) प्रकृति और काक के बीच।

एक बात जो कह सकते कि हम सब ने स्वतः उग आये पीपल या बरगद का पेड़/ पौधा किसी न किसी दीवार, पुरानी

इमारत, पर्वत या अट्टालिकाओं पर ज़रूर देखा होगा। देखा है न?

ज़रा सोचिये पीपल या बरगद की बीज कैसे पहुंचे होंगे वहाँ तक? इनके बीज इतने हल्के भी नहीं होते के हवा उन्हें उड़ाके ले जा सके।