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    ECB pumps $98 billion, 310 billion euros into money markets

    AFP
    14.10.2008 - 12:46 | Son Güncelleme:

    The European Central Bank said Tuesday it had pumped more than $98 billion (72 billion euros) back into interbank money markets in one-day loans at a lower rate than last week.

    Meanwhile, however, the ECB also made regular one-week euro loans that saw strong demand, with banks signing up for a total of more than 310 billion euros ($424 billion).

    The dollar operation has become a daily event aimed at keeping the U.S. currency flowing through the key financial pipeline, but this time banks did not take up the full amount on offer, $100 billion, suggesting there was slightly less need in eurozone markets for dollars.

    Commercial banks paid an average of 2.23 percent for the U.S. funds, the ECB said.
    For its weekly euro loans, the ECB charged its benchmark rate of 3.75 percent.

    On Monday, the central bank said it also would provide an unlimited amount of dollars to eurozone banks in one-week, one-month, and three-month loans at a fixed rate of interest that economists said should serve to calm tension on the markets.

    The money markets determine the availability of credit for vast numbers of people around the globe, from managers trying to fund their businesses to families and students seeking mortgages and personal loans.

    Commercial banks generally lend and borrow cash from each other on interbank markets but these have dried up since the U.S. market for high-risk, or subprime, mortgages collapsed more than a year ago.

    The ECB and other major central banks have been pumping huge amounts of cash in the form of loans to ease turmoil stemming from the latest crisis in the U.S. financial sector, after the investment bank Lehman Brothers went bankrupt last month.

     

     

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