The European Investment Bank (EIB) has approved a guarantee fund to shield firms facing liquidity shortages
Following a recommendation by the Eurogroup on 9 April, the EIB has now backed the creation of a €25bn ($27.6bn) European covid-19 guarantee fund. The fund will enable the EIB Group to scale up its support for European companies up to an additional €200bn, with a focus on SMEs.
The guarantee fund envisages a contribution from all 27 EU member states and will also be open to contributions by third parties, for example from the EU budget. The guarantee fund will be established under the EIB’s structure of Partnership Platform for Funds (PPF), based on existing legal frameworks and standardised procedures.
The fund will be formally established as soon as member states accounting for at least 60% of EIB capital have made the necessary commitments. As there is no need to create new instruments or processes, the fund can be set up rapidly.
The European covid-19 guarantee fund will be implemented by the EIB and the EIF, the group’s subsidiary that specialises in funding small and medium-sized enterprises. It will serve as a protective shield for European firms facing liquidity shortages.
In order to address the consequences of the pandemic in all impacted markets and sectors, the EIB Group will deploy a broad mix of products. The EIB Group and its partners will make sure that the mix of products backed by the fund responds to market needs and requirements to respond to the crisis.
The EIB Group will implement the fund in consultation with experts in national authorities, including central banks, to identify where the needs are most pressing.