FRANKFURT, March 3 (Reuters) - The European Central Bank is working on measures to provide liquidity to businesses hit by the economic fallout of the coronavirus outbreak, three sources familiar with the discussion told Reuters.
One of the possible measures could include a targeted longer-term refinancing operation (TLTRO) directed at small- and medium-sized enterprises, who may be the hardest hit by the downturn.
The sources added that no decision on the scheme is imminent as preparatory work would take time.
An ECB spokesman declined to comment. ECB President Christine Lagarde said late on Monday the bank is ready to take “appropriate and targeted” measures.
The sources said that while the ECB has done preparatory work for such a scheme in the past, it has yet to be discussed by the rate-setting Governing Council and so would still face considerable scrutiny before any implementation.
The rationale for such a scheme is that small- and medium-sized business have generally more restricted access to credit and would thus feel a bigger hit from any downturn.
Larger firms meanwhile already enjoy the benefit of the ECB’s corporate sector bond purchases.
A fourth source added that some Governing Council members still see the issue as short-term and largely outside the scope of monetary policy, thus mainly requiring a fiscal response. (Reporting by Balazs Koranyi and Francesco Canepa; Editing by Catherine Evans)