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ECB to further boost bank lending

12-08-2011 14:38 BJT

The European Central Bank is set to announce measures to stimulate bank lending again, rather than increasing its government bond purchases to fight Europe's debt crisis. Options on the table include loosening collateral criteria so that institutions have more access to cheap ECB cash, as well as offering them longer-term loans to grease the flow of credit to the economy.

Officials said an interest rate cut is likely, with only the size of the reduction to be determined for the monthly decision coming out soon. They say policy makers may seek to broaden the pool of eligible collateral for ECB loans by loosening rules governing the use of asset-backed securities.

They may also increase the amount of uncovered bank bonds that can constitute a lender’s collateral portfolio from the current 10 percent limit. Policy makers are expected to cut the benchmark rate by a quarter of a percent to one percent. Others predict a half-point reduction to 0.75 percent.

Meanwhile, ECB governor Mario Draghi is scheduled to speak at a press conference in Frankfurt, 45 minutes after the ECB’s rate decision is announced.


Editor:Zhang Rui |Source: CNTV.CN

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