PRAGUE (Reuters) – The Czech Senate on Thursday granted the central bank powers to buy a wider scope of assets in markets and adopted other measures giving businesses and people some relief from restrictions imposed to curb the coronavirus outbreak.
The government-backed bills will head to the president for his signature after having passed the lower house in the last week.
The Czech Republic acted quickly in March to impose tough restrictions on shops and people to curb the COVID-19 outbreak, which has helped to slow the spread of the virus to the point that some measures will soon be softened, particularly as the clampdown has ground large swathes of the economy to a halt.
Czech markets have also come under increased volatility, caught up in global market gyrations that pushed the crown currency to a five-year low at one point in March.
Business groups have said state aid has been slow to arrive and not large enough. In an Industry Confederation survey last week, 72% of firms deemed the government’s measures inadequate.
The bills approved on Thursday by parliament’s upper house allow for a moratorium on most bank loan payments or give some help to travel agencies, which will not be obliged to refund cancelled trips immediately and can issue vouchers instead.
The Senate also approved a bill allowing the Czech National Bank to buy a wider range of assets from more market counterparties, boosting its ability to react to crises.
The bank – which last month cut its main policy rate by 125 basis points to 1.00% to ease the virus’s economic impact – has sought such legal changes for years. Although it has said it did not plan to use its new powers to start asset purchases at the moment, it did want to have those tools available.
Under the new law it will have a freer hand to buy state, corporate and mortgage bonds and other assets, and from counterparties including pension and insurance firms and institutional investors.
All the measures are part of the government’s coronavirus responses, which have included state pledges to partly cover salaries of employees at firms hurt by the crisis – to avoid layoffs – and a one-off subsidy for the self-employed.
** For a graphic on new coronavirus cases in the Czech Republic: https://fingfx.thomsonreuters.com/gfx/editorcharts/yzdvxkkxpxe/index.html
(Reporting by Robert Muller and Jason Hovet Editing by Mark Heinrich)
