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ECB discussing ways to ease SME funding costs - Liikanen

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(Globalpost/GlobalPost)

HELSINKI (Reuters) - The European Central Bank is discussing how to cut funding costs for small and medium-sized businesses in countries most affected by the debt crisis, ECB governing council member Erkki Liikanen said on Thursday.

SMEs in the euro zone's most indebted states face much higher financing costs than their peers in the core, which makes it difficult for them to expand their businesses and help drive the economic growth needed to bring down national debts.

"This is a difficult question but I can say it is on our table, under consideration," Liikanen, the governor of Finland's central bank, told a news conference.

Another member of the governing council, Cypriot central bank chief Panicos Demetriades, also hinted in an interview with Reuters published on Thursday that the ECB could take further action to help SMEs.

"I don't think we should rule out the possibility that there might be non-standard measures that may help particular sectors of the economy more than others," said Demetriades, when asked about SME funding difficulties.

He declined to give out details of the moves the ECB is mulling, but was sceptical about the central bank buying securitised loans, saying: "I do not see that as a very realistic way forward, frankly."

Asked last Thursday about possible moves to boost lending to SMEs, including potential changes to collateral rules, ECB President Mario Draghi said: "No, we are not at this point in time ... committing or planning anything special."

The ECB discussed cutting interest rates at its monthly policy meeting a week ago, but decided to keep them on hold at 0.75 percent.

Liikanen said earlier on Thursday that he expected monetary policy to remain loose.

"Inflationary pressures should remain contained and inflation expectations remain firmly anchored in line with the ECB's objectives," he said in a statement. "This will allow the monetary policy stance to remain accommodative."

The Bank of Finland forecasts annual inflation in the "EU 20" - the euro zone plus Britain, Sweden and Denmark - will remain around 1.5 percent through 2015 - undercutting the ECB target of close to but below 2 percent.

The 17-country euro bloc's inflation rate dropped below 2 percent last month.

Liikanen said the ECB's policies so far had helped remove "unfounded fears of the reversibility of the euro," but added that monetary policy alone was not enough to resolve Europe's financial crisis.

"Structural reforms and measures to address the imbalances in the economy are indispensable," the Finnish central bank chief added.

(Reporting by Jussi Rosendahl; Editing by Catherine Evans)

http://www.globalpost.com/dispatch/news/thomson-reuters/130314/ecb-discussing-ways-ease-sme-funding-costs-liikanen