Markus Brunnermeier, Jean-Pierre Landau, Marco Pagano, and Ricardo Reis
European firms face a temporary, yet dramatic liquidity shortage due to the drop in their revenues, and this may prevent them from being able to keep on paying wages and repaying their current debt obligations, with devastating effects across Europe. The EU can throw them a liquidity lifeline via the following Euro-wide, direct funding scheme: the European Investment Bank (EIB) borrows the necessary liquidity from the European Central Bank (ECB), and extends loans at zero interest rate to firms strapped for cash. The national tax authorities will then collect the revenues to recover the loan over a period of a few years and pay back the EIB
