(FinancialHealth.net) – In a last-ditch effort to control the widespread coronavirus, Italy has made an unprecedented move. Not only is the country in full lockdown mode, but its leaders have also paused all mortgage payments.
In Italy #CoVid19 threatens many institutions, their banking system seems (to me) to be their most vulnerable.
In 2007 US Banks shored up balance sheets, great move!
Europe, esp Italian Banks failed to do the same.
US is ok UNLESS Italy becomes Greece 2.0https://t.co/cxXwyX5PtY
— 🇺🇸 ERIC BOLLING 🇺🇸 (@ericbolling) March 9, 2020
Here in the US, this probably seems a bit baffling. Just letting people off the hook? Why such a drastic action — and does it really work?
It turns out the answer might be yes… but whether or not that would work here on US soil, and whether it’s a safe option for the economy, is up for debate.
Italy’s Drastic COVID-19 Response
While the nation’s some 60 million residents are confined to their homes, many can’t go to work. Businesses have closed or gone into “emergency maintenance mode.” Some, of course, have the option to work remotely. But that’s just not an option for everyone.
Suspending mortgage payments and other “absolute necessity” debts makes it easier for people to take time off from work and stay out of public places. This is important as health organizers scramble to contain the deadly virus. Other debt payments, including loans and credit cards, might also be suspended in the near future.
The country has also instituted an emergency economic package of 10 billion euros to help stabilize the effects of COVID-19 on the economy. This makes it easier for families to abide by local curfews and contain their movement for the time being without the immediate financial burden of basic needs.
What About the Economy?
Italians certainly benefit from the country’s emergency relief package, both financially and health-wise. Yet, stock markets continue to plummet all over the world, and suspending payments could worsen those vulnerabilities long-term. Any decision to provide relief should be tempered with consideration of the economical effects.
~Here’s to Your Financial Health!
Copyright 2020, FinancialHealth.net