Arab Today, arab today ecb unveils measures to help eurozone banks
Last Updated : GMT 22:42:36
Arab Today, arab today
Arab Today, arab today

ECB unveils measures to help eurozone banks

Arab Today, arab today

Arab Today, arab today ECB unveils measures to help eurozone banks

Berlin - AFP

The European Central Bank unveiled new measures on Thursday to help eurozone banks with additional liquidity in a bid to avert a possible credit crunch in the single currency area. Nevertheless, ECB President Jean-Claude Trichet said that while the bank was willing to continue to play firefighter while the debt crisis raged, it was ultimately up to governments to get their finances in order over the longer term. At its regular monthly policy-setting meeting here, the guardian of the euro held off cutting rates for now in spite of fears of a looming recession in the 17 countries that share the single currency. However, the bank\'s decision-making governing council said it would beef up its armory of \"non-standard\" measures to help out cash-strapped banks. The ECB \"has decided to conduct two longer-term refinancing operations ... one with a maturity of approximately 12 months in October and the other with a maturity of approximately 13 months in December,\" Trichet said. These would be in addition to a range of regular and special-term refinancing operations already being used to keep banks supplied with sufficient cash. On top of this, the ECB would relaunch its so-called covered bond programme, where it would buy up to 40 billion euros ($54 billion) of bank bonds covered by collateral, starting in November. The aim of this range of measures was \"to ensure that euro area banks are not constrained on the liquidity side,\" Trichet said. But he warned: \"All the non-standard measures taken during the period of acute financial market tensions are, by construction, temporary in nature.\" And the onus was ultimately on both governments and the banks themselves to resolve the current crisis. The ECB \"urges banks to do all that is necessary to reinforce balance sheets ... where necessary they should take full advantage of government support measures which should be made fully operational,\" he said. Likewise, it was not up to the ECB, but to governments, to leverage the eurozone\'s bailout fund, the European Financial Stability Fund (EFSF), Trichet insisted. \"We don\'t see it as appropriate that the ECB leverages the EFSF,\" Trichet said. \"The governments have the capacity to leverage (it).\" Eurozone finance ministers are looking for ways of boosting the firepower of the 440-billion-euro EFSF, which financial experts say is needed to ensure the eurozone debt crisis, anchored in near-bankrupt Greece, does not engulf the much larger Italian and Spanish economies. One possible option would involve the EFSF being able to access vast sums of money from the ECB, which has already had to step in and buy over 156 billion euros in risky Greek and other eurozone bonds in a bid to stabilise the euro. But the ECB is vehemently opposed to this.

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Arab Today, arab today ecb unveils measures to help eurozone banks Arab Today, arab today ecb unveils measures to help eurozone banks

 



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