Croatian MEP Tonino Picula, along with forty other colleagues, posed a question to the European Central Bank about how it intends to help micro, small and medium-sized enterprises with liquidity problems stemming from the corona virus pandemic.
Some of the specific questions relate to how the ECB plans to make guarantee mechanisms available to financial intermediaries in Member States, and how will they use the strength of the ECB's balance sheet to directly assist SMEs?
According to MEPs who sent questions to the European Central Bank, the corona virus pandemic has escalated into an external macroeconomic shock that disproportionately affected SMEs, threatens job destruction and endangers their survival in the aftermath of the crisis.
Consequently, the MEPs stressed out the necessity to provide SMEs with immediate access to liquidity. They stated that regardless of when the money will be made available, it would likely have a destructive effect on SMEs' balance sheets. Therefore, the money borrowing cost should be zero percent and should not depend on credit worthiness, but on the urgency of the need for liquidity.
On the other hand, regardless of the cost, any increase in indebtedness will have a long-term negative effect on small and micro enterprises.
They concluded that the European Central Bank's liquidity guarantees mechanism will be crucial for the success of rescue measures for small and medium-sized enterprises, and that the "rescue at all costs" policy needs to be extended, especially in the so-called real sector where this need is acute.
