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European Central Bank lends $712 billion to Banks

The European Central Bank has made €529.5 billion ($712.4 billion) in low-interest loans to banks in the second round of a giant cash infusion that has been credited with easing the eurozone debt crisis.

The offer of credit for three years was taken up Wednesday by 800 banks. The uptake was modestly higher than the €489 billion ($657.9 billion) handed out to 523 banks at a first offering on Dec. 21. Banks used some of the money from the first round of loans to buy government bonds.

That lowered borrowing costs for hard-pressed governments struggling to maintain large amounts of debt, and eased fears of a market meltdown from Europe’s troubles with too much government debt.

The ECB loans, given against collateral such as bonds or other securities, cost banks the average of the ECB’s benchmark rate over the life of the loan. Right now that’s 1%.

Analysts had expected the amount of new loans to come in just under that for the first offering.

via European Central Bank lends $712 billion to 800 banks – USATODAY.com.

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