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Banks in the Eurozone plan to help the business, after covering it with affordable loans in times of quarantine for pandemic coronavirus. They expect to ease lending standards due to guarantees from the government and measures to increase liquidity, Reuters reports, citing the European Central Bank (ECB).
The ECB argues that the pandemic has forced banks to tighten the criteria for the selection of borrowers, however, the situation is not as bad as during the global financial crisis of 2008-2009. A significant role in mitigating the effects played by the efforts of the governments of the Eurozone countries.
Among the largest Eurozone countries with tightened lending standards include Germany and Italy, while in France they remained on the whole unchanged. The ECB also noted that the firms demand for loans increased in the first quarter of 2020 because of the need to obtain liquidity.
The introduction in Europe of rigid restrictive measures due to pandemic COVID-19 Eurozone economy risks to be reduced by ten percent this year. Companies are trying to find funding to stay afloat until economic activity resumes. ECB measures to increase liquidity and government guarantees will fully enter into force in the second quarter. According to a survey among 144 lenders, banks expect a gradual introduction of lightweight lending standards in the second quarter of 2020, this is expected to help a significant part of European enterprises.
Due to the increased extra spending in the context of a pandemic, the ECB has announced a programme for buying government securities for a total amount of 750 billion euros.
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