Coeuré: ECB confronts SME financing challenge

Louise Bowman
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In an exclusive interview, Benoît Coeuré, member of the executive board of the European Central Bank, discusses the challenges that Europe faces in stimulating financing to small and medium-sized enterprises, including the creation of a truly pan-European and cross-border capital market in the region and how securitization can be used to re-establish funding to these firms.

The recent focus of both regulation and markets has turned towards SMEs and the problems they face. There is recognition of the importance of getting financing to these firms to stimulate economic growth. In the US there is a big, developed non-bank financing market for these companies. In Europe there is a long-term goal of shifting this financing away from the banks – how do you achieve that?

This is a really important issue right now, because SMEs are key to growth and they have a prominent role to play in kick-starting economic recovery in the region. In Europe, SMEs have traditionally relied on bank financing. This channel is currently impaired, not least because of the necessary deleveraging that is going on in the European banking sector, but also because of market fragmentation. Therefore it feeds into a more general project: recreating an integrated capital market in the euro area....