38 LEGAL IMPACTS OF COVID-19 IN THE TOURISM INDUSTRY Last but not least, the Commission gave its interpretation13 on how accounting and valuation requirements can be interpreted in a flexible way to avoid that the pandemic’s negative impacts deteriorate banks’ capital immediately, before knowing whether the debtors would be able to pays their debt service in the longer run. This way one can prevent that the negative situation immediately spills over the banking sector, and results in the failure of financial intermediaries. Moreover, the European Central Bank, which already applied monetary stimulus measures in recent years on multiple occasions, launched a new temporary asset purchase programme to buy private and public sector securities to counter the serious risks to the monetary policy transmission mechanism, and to improve the outlook for the euro area posed by the outbreak and escalating diffusion of the coronavirus14. This budgetary and monetary flexibility coupled with the lenient temporary State aid rules allowed unprecedented spending by the Member States. On the basis of the budgetary numbers of the Recovery and Resilience Facility, it is clear that public spending will be likely be strong in the coming years, too. This article focuses on the State aid aspects of these regulatory and policy changes with a special outlook to the tourism sector, which has suffered an unforeseeable and massive collapse due to pandemic, and which indeed requires State aid. 2. THE BASICS OF EUROPEAN STATE AID LAW15 2.1. The Principles of State Aid Control The main provisions and principles of State aid law are laid down in Articles 107-109 of the Treaty on the Functioning of the European Union (TFEU). Although Article 107(1) TFEU defines a general ban on granting State aid, this ban is not absolute and, based on the empowerment of the TFEU, the 13 Commission Interpretative Communication on the application of the accounting and prudential frameworks to facilitate EU bank lending Supporting businesses and households amid COVID-19 (COM/2020/169 final). 14 Pandemic Emergency Purchase Programme (PEPP), available in https://www.ecb.europa.eu/mopo/i mplement/pepp/html/index.en.html (accessed on 10 March 2021). 15 For more, see Staviczky, Péter (2021). Tourism and State Aid. In Competition Law in Tourism (Carlos Torres, ed.). ESHTE-INATEL. Available in http://intranet.eshte.pt/competitionlawintourism/.
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