Brussels - The EU's economy and finance ministers stressed the need for banks to keep lending to companies and consumers amid the economic uncertainties unleashed by the coronavirus pandemic, and specifically urged them not to pay out dividends this year.

Efforts to preserve economic activity in Europe

"[W]e urge all banks that have not already decided to do so to refrain from making distributions during this period and to use the freed capital and available profits to extend credit or other urgent financing needs arising from the ongoing crisis to their customers in a way that helps to ensure preserving economic activity," the ministers said in a statement after a video conference on Thursday.

"We call on the banking sector to support households and corporates affected by the Covid-19 outbreak, with the aim of ensuring business continuity."

German Finance Minister Olaf Scholz said ahead of the talks that the rules established in the wake of the last financial crisis starting in 2008 would not be compromised.

"We have to stick together in Europe," Scholz said in reference to the pandemic.

The virus is causing problems all over the world, governments everywhere are fighting to preserve human health, the economy and jobs, Scholz said.

"It is the same in Europe, and we have the appropriate resources for this," he said.

The finance ministers put together an initial coronavirus bailout package of up to 540 billion euros (590 billion dollars) last week at a meeting of the Eurogroup.

Further measures to help reconstruct the economy

In addition to the unemployment measures, this also includes a programme from the European Investment Bank for corporate loans and precautionary credit lines from the euro bailout fund, the European Stability Mechanism, for health expenditure.

"These are three important steps that will help organize the European Union as a union that acts together in this pandemic," said Scholz.

EU states still have to "explore" setting up a long-term recovery fund, but competing visions of how this could look remain.

EU countries are divided on whether so-called coronabonds, a shared EU debt instrument, should be used to finance the reconstruction of the bloc's economy.

The topic is likely to concern EU heads of state and government again at a video summit next week.

European Commission President Ursula von der Leyen is pushing for a European programme worth trillions of euros, using the term Marshall Plan for it to recall the massive reconstruction programme for Europe launched by the United States after World War II.

In order to raise the huge sums of money needed, the European Commission is considering issuing bonds itself with the help of guarantees from the EU countries and thus raising debts on the capital market.

The International Monetary Fund predicted this week that the eurozone's GDP will see a drop of 7.5 per cent this year due to the coronavirus.

 Possible effects of the coronavirus crisis on the economy