ECB makes it easier for banks to tap credit amid coronavirus crisis

FRANKFURT (Reuters) - The European Central Bank will make it easier for banks to borrow cash at rock bottom rates during the coronavirus crisis, it said on Tuesday, as it eased collateral requirements even at the cost of taking on greater risk. With much of Europe in lockdown to fight the pandemic, the 19 country euro zone is heading for a deep recession, raising fears that banks stop lending and push otherwise viable firms into insolvency. In a series of measures unveiled after an unscheduled Governing Council meeting, the ECB said it would ease collateral requirements, making it easier for banks to use its funding operations, which banks tapped for hundreds of billions of euros in March

Reuters April 08, 2020 00:08:54 IST
ECB makes it easier for banks to tap credit amid coronavirus crisis

coronavirus crisis" src="https://images.firstpost.com/wp-content/uploads/reuters/04-2020/08/2020-04-07T170943Z_1_LYNXMPEG361XF_RTROPTP_2_HEALTH-CORONAVIRUS-GERMANY.jpg" alt="ECB makes it easier for banks to tap credit amid coronavirus crisis" width="300" height="225" />

FRANKFURT (Reuters) - The European Central Bank will make it easier for banks to borrow cash at rock bottom rates during the coronavirus crisis, it said on Tuesday, as it eased collateral requirements even at the cost of taking on greater risk.

With much of Europe in lockdown to fight the pandemic, the 19 country euro zone is heading for a deep recession, raising fears that banks stop lending and push otherwise viable firms into insolvency.

In a series of measures unveiled after an unscheduled Governing Council meeting, the ECB said it would ease collateral requirements, making it easier for banks to use its funding operations, which banks tapped for hundreds of billions of euros in March.

"The measures collectively support the provision of bank lending especially by easing the conditions at which credit claims are accepted as collateral," the ECB said in a statement.

"The (ECB) is increasing its risk tolerance to support the provision of credit via its refinancing operations, particularly by lowering collateral valuation haircuts for all assets consistently," it added.

The measure will stay in place during the current pandemic and will be reviewed before the end of the year, the ECB said.

As part of the measures, the ECB will accept government guaranteed loans as collateral even with lower credit quality and it will allow banks to pledge more unsecured debt as collateral.

It will also reduce collateral valuation haircuts by a fixed factor of 20% and will start accepting Greek government debt as collateral, even if such papers are below investment grade.

(Reporting by Balazs Koranyi; Editing by Alison Williams and Jane Merriman)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

Pulitzer Prize-winning photojournalist Danish Siddiqui killed in Afghanistan: Politicans, journalists pay tributes
India

Pulitzer Prize-winning photojournalist Danish Siddiqui killed in Afghanistan: Politicans, journalists pay tributes

The Pulitzer prize winner, who was in Kandahar covering operations against Taliban, was killed when he was riding along with the Afghan Special Forces

Indian photojournalist Danish Siddiqui killed during assignment in Afghanistan's Kandahar province
India

Indian photojournalist Danish Siddiqui killed during assignment in Afghanistan's Kandahar province

Siddiqui had also covered the 2020 Delhi riots, COVID-19 pandemic, Nepal earthquake in 2015 and the protests in Hong Kong

Danish Siddiqui's passing is a reminder of the high price one pays for showing the truth
India

Danish Siddiqui's passing is a reminder of the high price one pays for showing the truth

Danish's photographs were not just documentation, but the work of someone who went down to eye-level, as they say in photographic parlance.