TRENTO, Italy (Reuters) - The European Central Bank should take new measures to level out corporate borrowing costs across the euro zone and help get credit flowing again to businesses, a senior official at the International Monetary Fund said on Sunday.
“We do think more could be done by the ECB, because it is clear the problem of financial fragmentation (in the euro zone) is not solved yet,” IMF Deputy Managing Director Nemat Shafik said at the annual “Economy Festival” gathering of economists and policymakers in the northern Italian town of Trento.
Borrowing costs for companies are very different in euro zone countries, underscoring the problems the central bank still faces in ensuring businesses in weaker euro zone countries benefit from loose monetary conditions in place for the whole currency bloc, Shafik said.
“Growth will not return and unemployment will not fall in the euro zone until this problem is solved,” she said.
“We know the ECB is looking at a variety of mechanism to fix the problem ... We will be very supportive on that,” Shafik said when asked if the ECB should start buying assets on the market to help easy credit reach private companies.
The European Central Bank is looking at ways to boost banks’ liquidity rather than cutting interest rates, ECB policymaker Ewald Nowotny said in an interview with Reuters on Tuesday.
Nowotny said the ECB could, for example, revive the asset-backed securities (ABS) market in Europe and lower the mark down on such assets when used as collateral at the ECB.
Reporting by Francesca Landini; Editing by Greg Mahlich