The European Central Bank (ECB) is ready to buy bad debts weighing in Southern countries in an attempt to end the fragmentation in the eurozone and boost funding to the SMEs, as confirmed by the German representative on the board of the entity, Jörg Asmussen .
“It’s part of the debate on lending to SMEs,” Asmussen said when asked about the measure, which was conducted by Expansion. The ECB is looking at it with an “open mind” and will do everything “within our mandate” to solve this problem, explained in an appearance before the Economic Affairs Committee of the Parliament.
The goal, the German banker continued, is to “revive the market asset-backed securities, particularly those backed by loans to SMEs, of course with strict supervision.”
The ECB representative stressed that “liquidity is not what is preventing banks from lending” but “the lack of capital or an increase in risk aversion.”
“For these items, capital and risk aversion, the ECB is more appropriate than other institutions such as the Commission or the European Investment Bank (EIB) to act,” he noted.
For his part, Vice President of the Commission responsible for Economic Affairs, Olli Rehn, has said that in “many parts of southern Europe” live SMEs are a “financial trap”.
“We are facing severe financial fragmentation in Europe, where similar types of companies must pay for credit interest rates significantly higher in southern Europe compared to the core countries,” said Rehn.
“It is very important that each European institution, within its mandate, works to overcome this funding and liquidity trap in southern Europe,” he insisted.
“We have to complete the repairing of the banking system as soon as possible, ensure its capitalization, build a banking union and resolve the liquidity trap.”