ECB to reintroduce year-long loans

7 October 2011

The European Central Bank (ECB) has announced it is to reintroduce year-long loans to provide lenders with access to unlimited cash through to January 2013.

Bloomberg reports the bank is to encourage lending via the resumption of purchasing covered bonds.

Efforts from the ECB to benefit euro-area lenders is providing more time for governments to recapitalize the institutes as the likelihood of Greece experiencing a default grows bigger, the news agency noted.

Christoph Kind, head of asset allocation at Frankfurt Trust, said: "Politicians, including Angela Merkel, have finally realised the urgency in protecting banks as a Greek default can no longer be ruled out and no-one wants a Lehman in Europe."

The industry figure added the ECB - which is the central bank for Europe's single currency the euro and has a main task of maintaining its purchasing power - is trying to ensure banks will not be faced with any funding issues in the near future.

By Claire Archer

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development