2020 was a year of surprises. While we move forward in 2021, the world is simultaneously facing two unseen crisis. First, the need to renew the finances in the public sector. Second, the need to deal with the climate changes, speeding up the transfer to renewable energy sources and transition of the world economy to a more sustainable path.
Merging in terms of strengthening the positions of the domestic market would make sense for many banks given that they are still segmented, whereby a number of small banks do not have economy of scale in order to compete efficiently, and keep, at the same time, the profitability and make the necessary investments in technology.
The European Central Bank remained unaltered the monetary policy at the first meeting in year 2021, after expanding its Pandemic Emergency Purchase Program (PEPP) for another 500 billion Euros and continued it until March 2022. However, the investors see that the central bank is reiterating its effort to adjust the policy as and when needed, leaving the door open for further stimuli, under circumstances of increased infections and new blockages. Given that many analysts project higher instability in the coming months, traders have to ensure to keep up with all the current issues, and thus, the positive impacts from the stimulating package are remain to be seen in the coming period.
While ECB should be in state of rest in the coming months, it shall probably be focused on its recently announced review on strategy for stimulating the openness, strengths and durability of the EU economic and financial system in the years to come. This strategy is intended to provide a leading role to Europe in the global economic management and enable good functioning of the international financial markets and multilateral system based on rules.
