ECB offers new loans to banks in ‘worst crisis since WWI’

With tensions rising in the eurozone banking system, the President of the European Central Bank Jean-Claude Trichet announced on the 6 October 2011 that the ECB would later in October 2011 offer banks unlimited 12 month loans, and, in December 2011, unlimited loans lasting almost 13 months until early 2013.

Meanwhile, unlimited weekly, monthly and three-month loans would continue to be provided at least until mid-2012 and the ECB would also buy €40bn of covered bonds, which are issued by banks and backed by mortgages or public sector loans and are regarded as ultra safe investments. The result should be to give banks better planning security, with the aim of unblocking financial markets paralysed by investor nervousness.

• Primary Source

ECB: Press Release, 6.10.11: ECB announces details of refinancing operations from October 2011 to 10 July 2012 http://www.ecb.int/press/pr/date/2011/html/pr111006_4.en.html

ECB: Press Release, 6.10.11: ECB announces new covered bond purchase programme http://www.ecb.int/press/pr/date/2011/html/pr111006_3.en.html

ECB: Press Release, 6.10.11: Introductory statement to the press conference. Jean-Claude Trichet, President of the ECB, Vítor Constâncio, Vice-President of the ECB, Berlin, 6 October 2011 http://www.ecb.int/press/pressconf/2011/html/is111006.en.html

ESO: Background information: Banks face new European stress tests / IMF urges swift action on Europe banks / Merkel willing to recapitalise banks / How to recapitalise a continent’s banks http://www.europeansources.info/record/banks-face-new-european-stress-tests-imf-urges-swift-action-on-europe-banks-merkel-willing-to-recapitalise-banks-how-to-recapitalise-a-continents-banks/

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