ECB takes action to keep banks lending during virus crisis

European Central Bank took action Tuesday to support lending to companies across 19-country eurozone by easing rules for banks that tap central bank for ready money.

action comes amid widespread efforts by central banks such as ECB and U.S. Federal Reserve to keep ecomy supplied with credit so that businesses can wear a devastating period of shutdowns, travel restrictions and social distancing.

Frankfurt-based central bank said it was temporarily easing collateral rules for lending to banks, meaning banks can w use a wider range of financial assets as collateral for short-term central bank credit and would get more money loaned for a given amount of collateral.

impact is to make life easier for banks so y can keep lending to companies and have less reason to restrict credit by calling in or t making loans. Banks are key for European ecomy because y provide most of financing for companies, in contrast to U.S., where borrowing on financial markets is more common.

ECB also restored Greek government bonds to approved collateral list, opening up credit for banks in Greece that hold m. y had been excluded from list after Greek debt crisis because y were t rated investment grade.

bank has already anunced an 870 billion-euro ($950 billion) program of bond purchases to support ecomy through end of year, as well as easing requirements.

(im credit: AP)