Don't pin all your hopes on SME asset-backed securities

"So the idea must be that the presence of the ECB in the SME ABS market would spur loan issuance. To make a significant difference to credit conditions in the periphery and repair the broken monetary policy transmission mechanism, that loan issuance would have to be simply huge and concentrated in periphery countries. There are several problems with this, to my mind.

Firstly,it makes a huge assumption about the scale of potential demand for credit in the periphery from creditworthy SMEs. Is discouraged demand really that huge - or is there actually a problem with the creditworthiness of potential borrowers, because of the widespread destruction of physical and human capital in the periphery? Distressed corporate loans in the periphery are far higher than in the core. That's why spreads are so high. Why would an SME ABS programme improve the creditworthiness of borrowers?"