ECB plots Amazon-style market to prevent Wall Street COVID-19 debt swoop

FRANKFURT/NEW YORK: Europe is working on an Amazon-style website to sell hundreds of billions of euros of bank loans which have been soured by the coronavirus crisis, in a bid to shore up the economy and challenge the dominance of big Wall Street debt investors.

"The market for bad loans has been dominated by a few very large buyers. In a typical scenario, one of these firms may buy a very large portfolio at steep discounts," O'Brien said. The ECB scheme, which has yet to be signed off and will be discussed with European Union officials on Friday, is inspired by Italian website BlinkS, which links buyers and sellers of loans, as well as debt auctions by a US federal agency.

"Success in buying and selling bad loans involves a lot of insider information. COVID means more bad loans ahead. Any sale must be transparent," Jazbec added. Under the new platform contemplated by the ECB, which could be up and running early next year, the packet size could be cut to €10 million, attracting smaller buyers who may pay more.

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