European Central Bank Executive Board member Joerg Asmussen said the ECB has discussed buying asset-backed securities to support lending to small and medium-sized companies.
Referring to an article published in German newspaper Die Welt today saying the ECB is considering ABS purchases, Asmussen said: “It is part of the ongoing work that we have to see what we can do to spur SME lending.”
He also told lawmakers in Brussels that policy makers “have an open mind to look at all things we can do within our mandate, and this relates to how can the market for asset-backed securities, especially backed by SME loans, be revived in Europe, of course under strict supervision.”
Smaller companies are facing “continued tight credit conditions,” ECB President Mario Draghi said last week after the Frankfurt-based central bank cut its benchmark rate to a record low of 0.5 percent. While the ECB is looking at all possible options to rekindle the ABS market, policy makers are “far from reaching any conclusion,” he said.
Asmussen’s comments “suggested that the discussions are in the early stages,” said Ken Wattret, chief euro-area economist at BNP Paribas SA in London. The European Investment Bank “would be taking the lead in the process,” he said.
A majority of policy makers, including Draghi, are in favor of ABS purchases, Die Welt reported, citing unidentified central-bank officials. Asmussen, Bundesbank President Jens Weidmann and ECB board member Yves Mersch oppose the plan, according to the article.
“We have to carefully balance” higher capital needs for financial institutions “but at the same time assure that banks are able to do what is their key job, to provide capital for the economy,” Asmussen said today.