ECB Pumps $662b Into Banking System

Published: 25-Jun-2009

The ECB expects the Euro-zone economy to start growing again by the second half of 2010

In its first-ever offer of one-year funds to tide over the continent's deep recession, Frankfurt-based European Central Bank has injected $662 billion into Euro-zone money markets, at the current benchmark interest rate of 1%, reported Wall street Journal.

ECB is under criticism for not acting as aggressively as the US Federal Reserve and Bank of England (BoE), amid the ongoing global financial crisis. While ECB has reduced its key lending rate from 4.25% to the present 1%, the Federal Reserve and BoE have cut their rates to near zero, and launched much bigger rescue packages.

In an interview to Bloomberg, Lorenzo Bini Smaghi, executive board member of ECB, said: “The loans should help reduce one-year market rates and six-month market rates. This should have an effect on mortgages, on rates that consumers and companies pay. It will be up to the competent authorities to make sure banks pass on the liquidity to the real economy.”