The European Union could face a financial crisis similar to the global crash of 2008 if governments don't coordinate to tackle the spread of the coronavirus, the European Central Bank President Christine Lagarde has reportedly said.
The 27 European heads of state held a conference call Tuesday evening to harmonize their actions against the virus. The epidemic that started in China at the end of 2019 has spread worldwide and is weighing on all major economies. Italy, France, Spain and Germany are among the countries with the highest number of confirmed cases worldwide.
Lagarde, who joined the phone call among the 27 EU leaders, told them that without coordinated action Europe "will see a scenario that will remind many of us of the 2008 Great Financial Crisis," Bloomberg reported, citing a person familiar with her comments. The Financial Times also reported that Lagarde called on EU leaders to take urgent action or risk another crisis, citing a source.
CNBC was not able to independently verify the reports. A spokesperson for the European Central Bank declined to comment.
ECB under pressure to cut rates
The governing council of the ECB is due to meet on Thursday for its latest monetary policy decision. Lagarde said earlier this month that the bank is "ready to take appropriate and targeted measures" to deal with the economic impact from the virus.
Some analysts are expecting the central bank to cut rates by 10 basis points.
This week's meeting takes place at a time when other central banks have already cut interest rates. Bank of England Governor Mark Carney said Wednesday that the coronavirus is "a different form of shock than 2008."
"There is no reason for this shock to turn into the experience of 2008, if we handled it well," Carney said after announcing a 50-basis point rate cut.
An EU official aware of the talks between the EU leaders, who did not wat to be named due to the sensitivity of the issue, told CNBC that "there are tremendous concerns" about the impact of the coronavirus on the economy.
Chancellor Angela Merkel of Germany said Wednesday that she agrees with Lagarde that the EU must not let uncertainty be carried over into the economy, Reuters reported.