Flash: ECB needs a fiscal backstop to support SME’s – BofA Merrill Lynch

FXstreet.com (London) - The ECB is very much in the limelight this week. For a EZ recovery, SME's must be supported for the long run and credit needs to come through. Alexandra Fletcher at BofA Merrill Lynch said that they have argued that for the ECB to be able to provide efficient support to credit to SMEs, it needs a fiscal backstop.

He continued to say that the ECB should go ahead with a thorough asset-quality review and foster bank resolution, adding that it could also give the ECB the political support to fund a scheme such as the US TALF, or proceed with ABS buying at a price that would not deter banks from selling. Overall, this postpones decisions on such unconventional monetary policies, at the very least, to July, and more likely after the summer, once the ECB has started assessing banks’ balance sheets based on more information.