On 17 December 2008, the European Commission announced that it had adopted a temporary framework that would allow EU Member States to alleviate the effects of the credit squeeze on the "real" economy (see Brussels Brief, 19 December 2008). Subsequently, the German Government proposed a number of measures based on Section 4.2.2 of this framework. These measures, which have now been approved by the Commission, involve interest reductions on loans by the main German Development Bank to small and medium-sized enterprises (SMEs) facing financial difficulties. The exact reduction in interest will be decided on a case by case basis. The loans may be granted for a maximum period of eight years, but all interest rate benefits will have to stop by the end of 2012, as stipulated by the Commission's framework.
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