FRANKFURT, Jan 28 (Reuters) - The strong link between euro zone states and banks can be a source of strength in the pandemic induced-downturn and is not necessarily a drag on growth like in the bloc's debt crisis, European Central Bank board members Isabel Schnabel said on Thursday.
With governments and the ECB providing ample cash to revive growth, banks have become key to transmitting funding to the real economy and insulating productive sectors that could otherwise be shut down, Schnabel argued.
"Contrary to the vicious 'sovereign-bank' nexus that plagued the euro area throughout most of the last decade, the current nexus, if managed properly, can be an engine for a faster recovery, which also supports the ECB’s price stability mandate," Schnabel said in a speech. (Reporting by Balazs Koranyi; Editing by Jon Boyle)
