ECB lends banks $639 billion over 3 years

(AP) The European Central Bank loaned a massive euro489 billion ($639 billion) to hundreds of banks for an exceptionally long period of three years to shore up a financial system that is under pressure from the eurozone's government debt crisis.It was the biggest ECB infusion of credit into the banking system in the 13-year history of the shared euro currency.

Wednesday's loans to 523 banks surpassed the euro442 billion ($578 billion) in one-year loans from June, 2009, when the financial system was reeling from the collapse of U.S. investment bank Lehman Brothers.

The ECB is trying to make sure that banks have enough ready cash so they can keep on lending to businesses. Otherwise, a credit crunch could choke off growth and spread the debt crisis to the wider economy through the banks.

Markets rose modestly on the outsized amount of credit support, which was far higher than the euro300 billion ($392 billion) expected, but the advance soon faded as the loans highlighted the problems facing Europe's banks. The Stoxx 50 of leading European shares was down 0.4 percent while the euro was trading 0.6 percent lower at $1.3063.


ECB lends banks $639 billion over 3 years - Yahoo! News (external - login to view)
Why on earth would banks need loans?

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