Bank supervision between risk reduction and economic renewal

ABSTRACT This paper investigates specific challenges of Covid for balancing economic growth and financial stability as they apply to paradigms, programmes and policies of bank regulation and supervision at the European Commission and European Central Bank. It finds that dominant paradigms of risk reduction and control remained intact, despite a temporary programme of regulatory relaxation to spur credit growth. The ECB and the Commission were united on state aid, regulatory loosening and promoting credit creation. However, while the Commission sought credit for businesses, much of the credit went into the European housing sector, with ECB support.