Together with credit insurers, the Federal Government is setting up a protective shield of 30 billion euros to secure supplier loans for German companies and to support businesses in difficult times. Credit insurances protect suppliers against payment defaults in the event that a customer at home or abroad is unable or unwilling to pay the invoice.
said: “This is threatening many companies because they are no longer receiving any orders. And if companies do still have orders, there is no certainty as to whether the customer will be actually able to pay for them. That is why we are providing a 30-billion-euro protective shield to ensure that credit insurers continue to cover any payment defaults, and help maintain supply chains in Germany and worldwide.”
Federal Minister of Finance Olaf Scholz said: “In setting up a protective shield, we are safeguarding the trade in goods and are thus ensuring a smooth flow of goods, which we urgently need right now. The protective shield is therefore another important component of the Federal Government's extensive set of assistance measures to further stabilise the economy. The assistance provided under the protective shield enables credit insurers to maintain existing cover commitments and also to take on new ones despite significantly higher default risks. This is a preemptive measure because at the moment, many customers are for the most part able to solve payment difficulties without our help.”
The Federal Government is providing a guarantee of up to 30 billion euros for compensation payments made by credit insurers for the year 2020. The associated leverage effect will secure business worth about 400 billion euros. The credit insurers will also make a significant contribution and pass on 65 per cent of their income from premiums in 2020 to the Federal Government. In addition, they will bear losses up to an amount of 500 million euros themselves and assume the default risks exceeding the guarantee provided by the Federal Government.