FRANKFURT (Reuters) - The European Central Bank’s supervision arm is expected to join the bank’s efforts on Thursday to support the euro zone economy as it battles with the fallout of the coronavirus outbreak, two sources with knowledge of the situation said.
Although the supervision arm is separated from the monetary policy side, the supervisor is planning to release a statement on Thursday after the ECB’s policy announcement, outlining how it could support the financial sector and ultimately borrowers during the crisis.
The sources declined to provide detail about the measures but said such coordination in the ECB was unusual and highlighted the ECB’s efforts in providing targeted relief, particularly to businesses most affected by the disruption.
An ECB spokesperson declined to comment.
The sources said that one way for the ECB to help could be to take a more flexible approach in loan forbearance, giving room for banks to modify the terms of credit to firms hit by the epidemic. The ECB could also call on countries that have enacted counter-cyclical buffers on lenders to release them.
The ECB itself is expected to approve a stimulus package, which is almost certain to include fresh liquidity provision and ultra-cheap loans targeted at businesses, primarily small and medium-sized firms.
The ECB could also cut rates and increase the pace of its asset purchases, economists say.
Reporting by Balazs Koranyi and Francesco Canepa; Editing by Catherine Evans