Arab Today, arab today ecb prepares to open liquidity floodgates again
Last Updated : GMT 04:58:02
Arab Today, arab today
Arab Today, arab today

ECB prepares to open liquidity floodgates again

Arab Today, arab today

Arab Today, arab today ECB prepares to open liquidity floodgates again

Frankfurt - AFP

The European Central Bank is preparing to flood eurozone banks with cheap money again this week in the second of two such operations aimed at preventing a credit crunch in the euro area. In an unprecedented move last December, the ECB announced it would lend as much as banks wanted at an ultra-low interest rate of 1.0 percent for a period of three years so as to keep credit flowing in Europe at a time when banks are increasingly wary of lending to each other in the current debt crisis. In the end, some 523 banks lined up to borrow a record 489.2 billion euros ($655 billion). At the time, ECB chief Mario Draghi said that a second such three-year auction of funds -- known as a long-term refinancing operation or LTRO -- would be held on February 29 and he estimated that demand for the new cash would likely be just as strong. Draghi, in office only since November, has since been keen to draw attention to the success of the operation. In an interview with the German daily Frankfurter Allgemeine Zeitung on Friday, Draghi said \"the impact of the three-year tender was underestimated when I announced it in December, because many people expected the ECB to expand its government bond purchases, the famous \'bazooka\'. \"Maybe I should have called the tender \'Big Bertha\' when I announced it, then everyone would have listened,\" Draghi said. Tensions in the banking system do indeed appear to have eased, borrowing costs for debt-wracked countries such as Spain and Italy have come down, stock markets across Europe have rallied and confidence is on the rise. Ever since the eruption of the crisis, the ECB has come under intense political pressure to step in and save eurozone countries sinking under huge mountains of debt. But the bank has argued from the very beginning that it is up to overspending governments to get their finances in order and restore the markets\' confidence in their ability to repay their debts, which is the underlying cause of the eurozone\'s current ills. The ECB insists its fire-fighting efforts must be limited to acting as lender of last resort for banks only and not for governments. Nevertheless, economists and ECB watchers are impressed with Draghi\'s performance so far, after just four months in office: in addition to a wide range of liquidity measures, the bank has cut interest rates twice, effectively reversing two rate hikes last year. Nobel-prize winning economist Paul Krugman, writing in the New York Times, was full of praise for Draghi. He \"brushed aside the inflation-worriers and engineered a large expansion of credit, which was just what the doctor ordered,\" Krugman wrote. John FitzGerald of the Economic and Social Research Institute, a Dublin-based think tank, similarly believed the LTRO has worked \"surprisingly well in getting the ECB off the hook. \"There was always talk of the ECB\'s \'big bazooka\'\" to solve the eurozone crisis and this was it, FitzGerald told AFP. \"If (Draghi) pulls this off and gets the ECB out of this hole, the pressure to act, without infringing on statues, then he\'ll have done a very good job,\" the economics professor said. While Draghi said the aim of the new funding was for banks to lend to households and businesses, there have been concerns that banks are simply hoarding the cash instead, as banks have been parking record amounts of cash in the central bank\'s overnight storage facility. Furthermore, in its regular quarterly bank lending survey, the ECB calculated that growth in loans to the private sector slowed substantially in December. \"The banks need to play the game, to redistribute part of the loans from the ECB. But that\'s a question of priorities, since they themselves are facing constraints,\" said Natixis analyst Cyril Regnat. Marie Diron, economist at Ernst & Young, noted banks had responded enthusiastically to the ECB\'s first three-year loan offer \"and we expect a significant take-up again next week.\" But she saw some downsides to the LTRO, too. \"It threatens to make banks in some countries dangerously dependent on ECB financing. Italian and Spanish banks now have five percent of their assets financed by the ECB and the more this rises, the more difficult it may be for banks to attract other financing,\" she said. \"Overall, we think that the ECB was right to step up its support to the banking sector. But we would warn against any statement that this marks a \'mission accomplished\' as one ECB official suggested,\" she said.  

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today ecb prepares to open liquidity floodgates again Arab Today, arab today ecb prepares to open liquidity floodgates again

 



Arab Today, arab today
Arab Today, arab today Nohan Seyam designs beautiful accessories

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories
Arab Today, arab today Tourism shows signs of recovery

GMT 09:59 2017 Monday ,20 February

Tourism shows signs of recovery
Arab Today, arab today Sarah Belamesh designs antiques of "ceramic"

GMT 19:45 2017 Monday ,20 February

Sarah Belamesh designs antiques of "ceramic"
Arab Today, arab today 11 family members dead in rebel push

GMT 07:57 2017 Tuesday ,21 February

11 family members dead in rebel push
Arab Today, arab today To probe sexual harassment claims

GMT 10:08 2017 Tuesday ,21 February

To probe sexual harassment claims
View News in Arabic - Business: مصارف
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today 57 monkeys carrying 'invasive' genes

GMT 16:00 2017 Tuesday ,21 February

57 monkeys carrying 'invasive' genes
Arab Today, arab today 63-Year-Old Woman Delivers Baby

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby
Arab Today, arab today Small ponds have outsized impact

GMT 15:53 2017 Tuesday ,21 February

Small ponds have outsized impact
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Nissan enhances sales in most markets

GMT 14:08 2017 Monday ,20 February

Nissan enhances sales in most markets
Arab Today, arab today Competes Sweden and Germans by S90

GMT 22:36 2017 Thursday ,16 February

Competes Sweden and Germans by S90
Arab Today, arab today Ahmed Fahmy stresses he did not ignore singing

GMT 06:34 2017 Sunday ,19 February

Ahmed Fahmy stresses he did not ignore singing
Arab Today, arab today London to tax old cars

GMT 14:06 2017 Friday ,17 February

London to tax old cars

GMT 21:11 2017 Saturday ,18 February

Egypt to hold first session of Arab film festival

GMT 06:50 2017 Wednesday ,15 February

Tragic fluctuations of Bakhtiari's life revealed

GMT 12:22 2017 Monday ,20 February

Kanye West puts hijab-wearing model

GMT 20:41 2017 Wednesday ,15 February

Teach monkeys to recognize themselves in mirror

GMT 23:29 2017 Thursday ,16 February

Home built on sand castles-style costs $8m

GMT 14:51 2017 Monday ,20 February

Ways to acquire presentation skills

GMT 19:16 2017 Friday ,17 February

Aziz House ready to host the tourists

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 12:39 2017 Monday ,20 February

newest smartphone another winner for Huawei

GMT 16:08 2017 Wednesday ,15 February

Shawsh reveals her collection "Jewelry of dreams"
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday