The European Central Bank president says the ECB is considering
buying asset-backed securities among possible options to support
lending to small- and medium-sized companies.
"We looked at a variety of things, one of which was this ABS," Mario Draghi told reporters yesterday after a G7 meeting of finance chiefs in near London. "We're still looking at that, it's one of the many options. We don't have a position, certainly, on that."
The ECB is keen to rally lending at banks, which account for about 80 per cent of corporate financing in the euro zone, compared with less than 20 per cent in the US.
Lending to households and companies in the region contracted for an 11th month in March. Small- and medium- zed companies, which account for the bulk of employment in Italy and Spain, have been particular victims.
"Getting less bad"
"On the lending side, we see that the situation is still tight, especially in the periphery, but not exclusively," Mr Draghi said. Still, "the situation is in a sense getting less bad. In other words it's still tight, but less tight than it used to be."
ECB executive board member Jrg Asmussen said on Wednesday that the central bank had discussed ABS purchases, while fellow board member Yves Mersch said the same day that it was "looking at ways to restart the ABS market."
Acquisitions in the ABS market are "not easy for the ECB to do because we're in a completely different set-up from the US, where you have a capital market," Mr Draghi continued, "so the ABS in this case would have to contain assets from the banking system of the euro system and you can understand what sort of moral hazard there is there."
Veiled state financing
German finance minister Wolfgang Schuble criticised Mr Draghi's plan to help some euro zone states by offering to buy securitised debt, Der Spiegel magazine reported yesterday, citing unnamed people.
At a government meeting on May 8th, Mr Schuble said the ECB assuming 70 billion of Italian debt would amount to veiled state financing in violation of EU rules, Der Spiegel reported.
The ECB's role in this is "going to be mostly catalytic because the ECB works with the EIB, with the commission," Mr Draghi said, referring to the European Investment Bank and the European Commission. "It is going to be very much up to these actors to act, rather than the ECB." - (Bloomberg)
(c) 2013 Irish Times. Provided by ProQuest LLC. All rights Reserved.
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