European Central Bank prepares plan against recession
The organism foresees unusual measures such as granting loans with negative interest rates to European banks so that they become a bridge to reach companies and ordinary people
Facing the recession in Europe requires drastic measures. In this regard, the European Central Bank has established a long-term financing plan or TLTRO-III (Targeted Longer-Term Refinancing Operations III).
It consists of granting loans to the banks of the continent, even with negative interest rates, which will allow them to function “as a transmission mechanism to reach ordinary people and companies”.
The entities included in these operations will benefit from sums of up to 30% of their loans granted to both individuals and companies. As a result, they may opt for more financing at lower rates than the ECB usually applies.
The return of the loans will have an unusual and extraordinary period of two years. It would start in September of this year and end in 2021. The ECB is anticipating the effects of the economic slowdown in the continent, offering longer periods than usual, ranging from one week to three months.
One reason that influenced the decision of the European Central Bank was the agreement to postpone the Brexit and that has caused the fall of the pound sterling. To this panorama are added the US commercial impositions for US $ 11,000 million to the goods coming from the EU, which will undoubtedly cause economic and commercial instability.
M.Pino
Source: Alnavio.com
