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ECB to flood euro banks with cheap cash

12-21-2011 15:07 BJT

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The European Central Bank is set to flood euro-area banks with cheap cash, as they flock to its offer of three year loans on Wednesday. Banks will ask the ECB for 293 billion euros of the 1134 day funds. Estimates range from 150 billion euros to as much as 600 billion euros. The money will be lent at the average of the ECB’s benchmark rate - currently at one percent - over the period of the loan.

Europe’s debt crisis has increased the risk of government and bank defaults, making institutions wary of lending to each other and driving up the cost of credit. The ECB is trying to ensure that banks have access to cheap cash for the medium term so that they can keep lending to companies and households.

In addition to the longer term loans, the ECB has widened the pool of collateral banks can use to secure the funds.

 

Editor:Zhang Rui |Source: CNTV.CN

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