ECB eases collateral rules in bid to boost economy

(FRANKFURT) - The European Central Bank said Thursday it would ease its rules for the collateral it accepts from banks in exchange for loans, in a bid to boost lending in the crisis-wracked eurozone.

In its biennial risk control review, the ECB said it had decided to allow banks to offer more types of asset-backed securities (ABS) in return for ECB funds.

The ECB is looking for ways to make its policy of easy money felt more widely in the real economy.

In particular, the central bank and other European institutions are concerned about the difficulties small and medium-sized enterprises (SMEs) in some countries are experiencing in securing funding.

The SMEs form the backbone of the European economy but are being held back by high financing costs. And that is preventing a wider recovery in the region.

"The list of collateral accepted ... will be expanded," the ECB said in a statement.

Under the collateral changes, most of which would likely come into effect in October, the ECB will lower the required credit rating on six classes of ABS.

Instead of two triple-A (AAA) ratings, the securities would need just two single-A (A) ratings, the statement said.

The ECB will "continue to investigate" how to improve funding conditions for SMEs," the statement said.