began, smes across europe turned to banks to meet their liquidity needs – and it was vital that a cheap and elastic supply of credit was available. 3 / 8 this is where the ecb stepped in. we monitor smes ’ access to finance very closely, including through a special europe - wide survey. and we took a series of measures specifically designed to help channel credit to firms in need. first, we launched our pandemic emergency purchase programme ( pepp ), which helped stabilise financial markets. that was crucial to ensure that bank lending rates did not tighten suddenly, since bank loans are priced off sovereign borrowing costs. second, we recalibrated our targeted longer - term refinancing operations ( tltro iii ), lending to banks at the lowest rate we have ever offered, but only on the condition that they used the funds to lend to firms. banks have taken up €1. 7 trillion in these operations so far. to access that liquidity, banks have to provide collateral, so we also decided to make loans to smaller businesses and the self - employed eligible as collateral for our operations. this encourages banks to grant loans to smes and refinance them by borrowing from the ecb. in parallel, our supervisory arm ensured that there were no prudential barriers to banks acting quickly, which freed up €120 billion in bank capital for new lending. and fiscal authorities complemented our efforts, making available wide - ranging loan guarantees and other liquidity support measures – equalling close to 20 % of euro area gdp. this was crucial to mitigate the higher credit risk banks face when lending to smes during a recession. as a result, from march to may last year, bank lending to euro area firms rose by the largest amount on record. and it was smes that benefited the most from both cheap and abundant credit. 4 / 8 lending rates on very small loans – which are a proxy for lending to smes – declined substantially, with firms able to borrow at the lowest rates ever recorded – below 2 %. [ 10 ] and, since march, €730 billion in new small loans have been granted to smes in the euro area, including €138 billion to smes in germany. our policies were key to achieving that outcome. banks taking part in our tltros saw a considerable increase in their credit growth, with loans rising by over €400 billion in the year up to september. and this dove

of europe or perhaps more than a paradox : a conundrum. why is it that not only we did not improve our productivity when the us did it – around the mid eighties – but that we observed on the contrary a very significant diminishing of our productivity? this phenomenon seems to me only half understood through traditional explanations : the impact of specific policies aiming at drawing back to work a significant number of previously unemployed unskilled workers – with a low level of productivity – that have been launched in several european economies ; and a degree of under - investment hampering the stock of capital allocated to each employee. but it explains only around half of the diminishing of the labour productivity growth. the other half seems to be explained by a significant diminishing of total factor productivity which is extremely surprising because it occurs precisely at the moment of powerful historical surge in science and technology. there we are at the heart of the conundrum. the conjecture i would propose is that, under certain circumstances, in a period of very rapid technological and structural changes, the more an economy is inflexible, the more it resists to these changes, to the extent that far from taking advantages of the acceleration in progress in technology its “ total factor productivity “ growth diminishes in comparison with what it was in the period preceding the surge of technology. in other words it seems that there is not only an “ opportunity cost ” for being inflexible in a period of very rapid technological change – i. e not seizing the new opportunities offered by the acceleration of changes - but also a “ direct cost ”, coming perhaps – and there lies the conjecture - from the fact that under the stress of accelerating changes the economy becomes even more inflexible and hostile to technological progress than in more “ normal times ”. the evolution of the “ total factor productivity ” growth in europe seems to confirm that phenomenon. from an average level of 1. 3 % in the 80 ’ s it diminished to an annual average of 1. 1 % during the 90 ’ s and 0. 7 % between 2000 and 2004. these observations are calling urgently for structural reforms, in particular all the reforms that would augment the flexibility of all markets – labour, goods and services and financial – in the euro area economy. the need for structural reforms understanding the reasons of these developments is very important. as also stressed by the oecd 5, the lack of sufficient structural reform in europe is a major cause of