Eurozone banks increase ECB holdings

15 December 2011

Banks across the eurozone are becomingly increasingly reliant on funding from the European Central Bank (ECB), new figures have revealed.

According to the latest data released by the institution, financiers across the continent deposited €346.4 billion ($449 billion) at the body in the week leading up to Monday (12 December).

This represents the highest figure since June of last year and suggests that the region is struggling to cope with the ongoing debt crisis threatening to engulf the eurozone.

Lenders are opting to hoard their cash instead of loaning it out to rival companies due to the fear this could place them at risk should the markets collapse.

One trader told the Financial Times: "The financial system is no longer functioning properly. Very few banks can get short-term loans in the private markets."

This comes after Bloomberg reported that European banks are selling some of their best assets in an attempt to make sure they fulfil new incoming capital regulations.

By Tony Aynsley

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