ECB is aware of need for liquidity within financial system, council member claims

30 June 2010

The European Central Bank (ECB) will ensure no banks fall into difficulty following the expiration of an emergency funding loan, a council member has claimed.

Christian Noyer, member of the ECB’s governing council, said that the body is aware of the needs of struggling financial firms within the eurozone.

He made the comments as a number of emergency loans worth a total of €442 billion ($540 billion) near their date of maturity on July 1st (Thursday).

Although other smaller loans will become available, the year-long borrowing opportunities will not be on offer again.

Instead ailing financial firms will be able to borrow unlimited amounts at a flat rate of one per cent over the course of the next three months.

Mr Noyer told Europe Radio 1: “The ECB and Eurosystem will do what is necessary to make sure the liquidity is there."

"This is an important expiry date ... there are some banks that are in a less good situation that might eventually suffer, but we will make sure that there are no problems and everything goes well."

Meanwhile, Elena Salgado, Spanish finance minister, warned the ECB that it needs to be aware of the various issues facing Spanish institutions.

By Jim Ottewill

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