Mend the Money Machine; Europe's Credit Crunch  

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[s.n]

Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Economist (http://search.proquest.com/) vol. 407 no. 8834 (May 2013), page 11-12.
Topik: Commercial Credit; Interest Rates; Statistical Data; Small Business Loans; Central Banks; Small Business; Monetary Policy; Euro

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Perpustakaan Pusat (Semanggi) Nomor Panggil: EE29.76 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Half of America's jobs are in small and medium-sized firms (SMEs). In Europe such firms play a far bigger role. In France SMEs employ 60% of workers, in Spain the figure is 67%--and in Italy, 80%. Because small firms do not issue bonds or sell equity in public markets, they rely on banks for borrowing. And since small firms are so vital, one of the measures of economic health in the euro area is how cleanly the interest rates set by the European Central Bank (ECB) feed through to the rates that firms pay. By that measure, the first eight years of the single currency were pleasant. If the ECB thought the economy was overheating, it could raise its rates, confident that the rates firms would pay would rise by the same amount. But that system has broken down (see Free exchange). The stable wedge between ECB rates and firms' borrowing costs has been replaced by an unstable gap that varies by country. One option is for the ECB to ease bank access to its existing low-rate funding window by accepting smaller SME loans as collateral. But that may not be enough.

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