LONDON/FRANKFURT: European Central Bank officials are drawing up a scheme to cope with potentially hundreds of billions of euros of unpaid loans in the wake of the coronavirus outbreak, two people familiar with the matter told Reuters.
The project, which comes as Europe mobilises trillions of euros to bolster the region's economy, is aimed at shielding commercial banks from any second fallout from the crisis, if rising unemployment chokes off the income needed to repay loans.
One of the people familiar with the plan said the ECB had set up a task force to look at the idea of a "bad bank" to warehouse unpaid euro debt and that work on the scheme had accelerated in recent weeks.
The ECB declined to comment on whether it was working on a bad bank scheme.
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