European Central Bank
February 29, 2012 by staff
European Central Bank, The European Central Bank threw open its liquidity floodgates again on Wednesday, pumping up the banks with nearly 530 billion euros in cheap loans to avert a dangerous credit squeeze.
In the second such cash bonanza in two months, the ECB said 800 banks took 529.5 billion euros ($712 billion) at exceptionally low interest rates in its second three-year long-term refinancing operation, or LTRO.
That beats the 489.19 billion euros borrowed by 523 banks in a first operation in December butanlysts said the move would merely buy time and not be enough on its own to solve the eurozone’s crippling debt crisis.
The ECB launched the ultra-long loans late last year with the aim of averting a credit squeeze in the 17 countries which share the euro.
The ECB, lending the money out at just 1.0 percent, hopes the banks will lend the cash to households and businesses and also use it to bring down government borrowing costs.
Analysts believe the first operation in December succeeded in easing funding problems for European banks, which have to deal with debt of 720 billion euros due to mature in 2012.
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