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European Central Bank President Christine Lagarde addresses the European Parliament in Strasbourg, France, on Feb. 11, 2020.

Vincent Kessler/Reuters

European Central Bank President Christine Lagarde has urged European Union leaders to dig into their pockets in the fight against the coronavirus outbreak or pay a higher price for passivity, two sources said.

Speaking to the bloc’s leaders in a conference call late on Tuesday, Lagarde emphasized the need for fiscal action to support the economy, citing the 2008 financial crisis as an example of the risks associated with inaction, the sources said.

The ECB is itself expected to unveil new stimulus measures on Thursday, likely to include a new funding scheme aimed at smaller companies and a cut to its policy interest rate.

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That would follow rate cuts from the U.S. Federal Reserve last week and the Bank of England on Wednesday to ease financial and economic distress from the rapidly spreading virus that has stoked fears of global recession and roiled world markets.

At Tuesday’s meeting, EU leaders decided to do “everything necessary,” from allowing state aid for companies to engineering an investment fund worth 25 billion euros, to combat economic fallout from the outbreak, which has spread to every EU country.

Coronavirus has infected more than 119,000 people globally and killed 4,296, according to a Reuters tally.

Italy was the worst-affected EU country, with 10,149 cases and 631 deaths.

The Italian government imposed a “red zone” on the entire country on Monday night, introducing the most severe controls on movement and activity in a Western nation since World War Two and raising fears especially among small businesses.

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