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Thread: ECB lends record €442 billion to commercial banks

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    Politics.ie Member Ramon21's Avatar
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    Default ECB lends record €442 billion to commercial banks

    The European Central Bank said today that it lent a record €442.24 billion at 1 per cent in one-year funds to commercial banks.

    The previous record for the central bank’s refinancing operations was €348.6 billion in two-week funds on December 18, 2007 as crisis-hit commercial banks scrambled to bolster their balance sheets during the crunch year-end period.

    Analysts at UniCredit markets expected the ECB operation to result in lower rates paid by commercial banks for longer-term borrowing in general and to reduce demand for short-term funds as well.

    If that is the outcome, then interest rates overall would be expected to remain low, a key issue as the eurozone grapples with what is likely to be slow recovery from the worst global recession in more than 60 years.
    Still, even as the investor consensus ravages the euro, it's worth remembering that the same herd instinct not long ago was pronouncing last rites for the dollar. Last year, as China's central bank chief called for a new global currency and Russian central bankers dumped greenbacks to buy euros, many saw the dollar's decline as inevitable. Now, the dollar is riding high, and the euro looks bedraggled.

    "Views might change very quickly"

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    Quote Originally Posted by Ramon21 View Post
    The European Central Bank said today that it lent a record €442.24 billion at 1 per cent in one-year funds to commercial banks.

    The previous record for the central bank’s refinancing operations was €348.6 billion in two-week funds on December 18, 2007 as crisis-hit commercial banks scrambled to bolster their balance sheets during the crunch year-end period.

    Analysts at UniCredit markets expected the ECB operation to result in lower rates paid by commercial banks for longer-term borrowing in general and to reduce demand for short-term funds as well.

    If that is the outcome, then interest rates overall would be expected to remain low, a key issue as the eurozone grapples with what is likely to be slow recovery from the worst global recession in more than 60 years.
    I wonder if this will filter into fixed term interest rates?

    My guess it won't.

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    Where does the ECB get that money?
    "It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair.

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    Politics.ie Member Ramon21's Avatar
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    Quote Originally Posted by He3 View Post
    Where does the ECB get that money?
    The ecb is the central bank of the euro-zone countries, so I guess they get the money like all other central banks.
    Still, even as the investor consensus ravages the euro, it's worth remembering that the same herd instinct not long ago was pronouncing last rites for the dollar. Last year, as China's central bank chief called for a new global currency and Russian central bankers dumped greenbacks to buy euros, many saw the dollar's decline as inevitable. Now, the dollar is riding high, and the euro looks bedraggled.

    "Views might change very quickly"

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    He3,

    It creates it out of thin air. It could create as much at it wanted. The ECB can create money, yet the Irish (or any) Government cannot.
    Last edited by Kensington; 24th June 2009 at 03:24 PM.
    "...Money exists not by nature but by law." Aristotle (Ethics, 1133)

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    Thanks K.

    There must be an opportunity to run a Fαs course on that? They are good at making money vanish, so this looks like a natural extension.
    "It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair.

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    How is that not increasing inflation in the Eurozone?
    Economic Left/Right: -2.88 (down 3.63 since the financial crash)
    Social Libertarian/Authoritarian: -5.18

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    Locke,

    It is preventing deflation. The money has to be created.
    "...Money exists not by nature but by law." Aristotle (Ethics, 1133)

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    hmm almost half a Trillion

    anyone have a list of the banks involved? amounts?

    I would love to know how much was spent purchasing governments bonds....

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    Quote Originally Posted by Ramon21 View Post
    The ecb is the central bank of the euro-zone countries, so I guess they get the money like all other central banks.
    Riiight... what kind of half-assed answer is that? Just vote yes to lisbon and everything will be ok, is that it? Let's ignore the economic fallout that's coming down the line until the referendum? I only hope that most people are not fooled by the subterfuge.

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