ECB 'considering extended bank loans'

25 November 2011

Banks across Europe may benefit from extended loan terms from the European Central Bank (ECB) in the near future.

That is according to sources close to the institution, who have told Reuters it is considering the possibility of offering financiers two or three-year lending arrangements in order to prevent the current debt crisis going any further.

There is concern among officials that the present situation could turn into a full-blown recession across the continent, which would have a huge negative impact on the region's economic future.

At present, the longest term made available is 12 months, but the ECB feels increasing this period would provide banks with greater fluidity when purchasing and holding sovereign bonds.

"The question for the ECB is whether banks would be interested in it," the source noted.

Recent figures showed that demand for loans from the central institution from banks has gone up to its highest level for more than two years.

By Asim Shah

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