The ECB calls on governments to give liquidity to energy companies in the face of the crisis

The president of European Central BankChristine Lagarde, advocated this Friday that governments provide liquidity to companies energetic solvent to avoid bankruptcies and maintain financial stability. “In the current very volatile environment, it is important that fiscal measures be put in place to give liquidity to solvent companies in the energy marketin particular public service companies,” Lagarde said at a press conference after a meeting of economy and finance ministers of the eurozone (Eurogroup). in Prague.

These would be measures such as those recently launched by Sweden and Finland, countries that have announced plans to give millionaire guarantees to energy companies affected by the situation generated in the energy market by Russia’s war against Ukraine. “These measures should be targeted to protect critical energy companies from bankruptcy and preserve financial stability. Ideally, at the EU level, Member States should take a collective approach and the European Commission is working in this direction”, said the president of the ECB.

Lagarde clarified that the ECB and central banks they cannot provide liquidity to these companies, only to banks that participate in compensation mechanisms for energy companies. He added that the ECB’s opinion is that “lightening prudential requirements should be avoided” for central counterparties, financial entities that act as intermediaries for contracts between other companies, especially in the derivatives market, and that bear the risk in the event of non-payment by one of the parties. The president of the Eurogroup, Paschal Donohoe, indicated that “all governments” are considering supporting the liquidity of public service companies and that they are working with the community institutions to see how it could be done in a coordinated manner “and ensure that we do not create new risks”.

In this regard, the European Commissioner for the Economy, Paolo Gentiloni, said that “the volatility of the energy futures market deserves to discuss the possibility of intervention by the Commission“and that this will be one of the topics for debate in the face of the next decisions of the Community Executive, which hopes to make a proposal on Tuesday with intervention measures in the energy market. In any caseBrussels is already considering extending the temporary framework for state aidwhich makes it easier for countries to grant public aid in the event of serious crises.

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