##eviating bank funding constraints, containing the risks of a disorderly bank deleveraging process, and supporting the effective transmission of interest rates across the euro area, amid a dysfunctional financial market. these measures were exceptional in nature, scope and magnitude, and yet appropriate for the severity of the circumstances. these interventions have served to considerably ease the downside pressures to price stability by avoiding an abrupt credit crunch stemming from sudden shortages of liquidity and funding for banks. however, at times, the effectiveness of monetary policy itself has been hindered by financial fragmentation, in particular against the backdrop of a sovereign debt crisis in some euro area jurisdictions. as a result, the accommodative monetary policy stance set by the governing council has affected firms rather unevenly. the ecb will provide ample liquidity as long as needed, but market participants have to continue their efforts to facilitate the transition to a less central - bank reliant, more market - based financial system. against this background, attention has turned to the role of public policies in reducing impediments and unclogging credit channels towards smes. as a first measure, most governments have expanded credit guarantees to smes for the purpose of inducing banks to reopen their lending facilities, thereby reducing the risk that banks need to take on their balance sheets when granting new loans. other measures have tended to stimulate the chronic shortage of supply of capital into new seed, start - up and early - stage firms. venture capital ( vc ) funds have been channelled through public / private co - investment vc funds managed by private sector fund managers. innovative instruments have included the promotion of investment in sme equity to cope with the undercapitalisation problem. some of for a detailed description of a model - based methodology of this type, see box 2 “ analysis of the impact of credit supply factors on economic activity using structural models ”, monthly bulletin article, january 2011, european central bank. see also ecb structural issues report 2013, “ corporate finance and economic activity in the euro area ”, forthcoming. bis central bankers ’ speeches these measures have a longer - term structural perspective, rather than something that can address the immediate conjunctural weakness of smes. overall, loan schemes, especially guarantees, tend to have a much larger impact in terms of the number of firms affected, while venture capital and similar schemes are much more targeted and restricted to specific groups of firms. however, they have proved to be of limited effectiveness in stressed countries

, para ( 1 ), of the capital requirements regulation ( crr ) : “ capital requirements for credit risk on exposures to small and medium sized enterprises shall be multiplied by the factor 0. 7619. ” bis central bankers ’ speeches 1 january 2016 with a 10 - year phase - in period, the capital requirements for certain securitised products will increase significantly, thus potentially reducing insurers ’ willingness to allocate funds to such asset classes. the appropriateness of the capital charges in solvency ii and their consistency with the capital requirement rules under the crd iv are currently being reviewed by eiopa. in this regard, particular attention needs to be paid to providing a level playing field for banks and insurers as well as to enhancing long - term financing of the real economy through the securitisation of debt. conclusion in the nearer term, how can the impediments to bank funding of smes be addressed? in essence, these impediments are of three types : the banks ’ own funding conditions, their perception of the credit risk of their clients, and lack of capital. the ecb does not have a magic wand. the central bank cannot compensate for a shortage, or a misallocation of equity. that is something that has to be addressed, in one form or the other, by other stakeholders. neither can the central bank alter the credit risk of individual borrowers, although governments can have an impact here through reforms that improve the operating environment of those firms – labour and product market regulation for instance. where the central bank has a direct role, within its mandate, is primarily with respect to bank funding conditions. indeed, the ecb has taken and will continue to take appropriate measures to ensure that bank funding is not a source of financial fragmentation or an impediment to bank lending. it is reasonable to think that simultaneous action on all three counts, by the relevant stakeholders in each case, would be mutually reinforcing. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches