German Merchants Call For Gov’t Assistance; Banks In Europe Accept $130B To Lessen Financial Stress

The coronavirus is spurring trade groups to ask for aid and governments to provide assistance for banks. Here are the latest updates on the coronavirus around the world.

As shops shuttered to curb the coronavirus’ spread, the HDE retail association of Germany asked for the government to provide tax relief and state aid as soon as possible to prevent companies from going out of business, Reuters reported. The organization noted that shop closings would bring about a loss of sales of 7 billion euros ($7.6 billion) weekly or 1.15 billion euros ($1.3 billion) daily.

“Massive loss of turnover is destroying thousands of independent companies and millions of jobs,” said HDE President Josef Sanktjohanser in a statement that indicated he contacted Chancellor Angela Merkel to request assistance, per the report.

The executive also noted that eCommerce merchants were also impacted as shoppers pull back spending.

The HDE requested that the government defer tax payments right away, along with the exclusion of interest, in addition to social security contributions due this month and next. The organization also said that many merchants are encountering insolvency unless state aid is given right away.

Meanwhile, financial institutions (FIs) in Europe accepted $130 million that the U.S. Federal Reserve provided, which aided in reducing the funding pressure provided by the coronavirus outbreak, Bloomberg reported. European leaders borrowed most of the funds. Swiss banks received $2.6 billion, while lenders in Britain received $15.5 billion through the Bank of England.

Euro-dollar cross-currency basis swaps are said to be a proxy for how costly it is to get ahold of U.S. currency. And challenges with sourcing greenbacks reportedly bring back memories of the stress the financial system encountered at the start of the financial crisis in 2008. Central-bank swap agreements were made to stop those challenges from happening again.

The dollar funding occurred one day following the European Central Bank’s (ECB’s) move to loan $120 billion to banks until more advantageous targeted long-term loans become possible to receive in June.

The Fed, for its part, enhanced current swap lines with the major central banks around the globe, with the inclusion of the Bank of Canada, the Bank of Japan, the Swiss National Bank and the ECB with its easing initiative.