22nd Feb 2020

ECB lends €442bn in record auction

  • The ECB's latest move is designed to unblock lending in the Eurozone (Photo: Wikipedia)

The European Central Bank (ECB) will pump a further €442 billion into money markets after a record auction on Wednesday (24 June), in which eurozone banks snapped up one-year loans amid expectations borrowing costs may rise in future.

The ECB move to lend billions of euros across the 16-country currency area is designed to unblock bank lending, improve private sector access to credit and revive the area's ailing economy.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or join as a group

Banks provide roughly three quarters of company financing in the eurozone.

Financial markets have dubbed the move a continuation of the ecb's non-standard measures, with Wednesday's auction part of a wider ECB policy to provide unlimited liquidity to banks since the financial crisis began.

The €442.2 billion in 12-month loans – charged at the ECB's current benchmark interest rate of one percent - went to 1,121 banks. They will receive the funds on Thursday.

The move appeared to take immediate effect with the euro area's interbank lending rate – the Euribor – falling to record low of 1.57 percent for 12-month loans on Wednesday.

Faced with the worst recession since World War II, the ECB has also cut interest rates to a record low in recent months and will next month start buying €60 billion in covered bonds.

Two more auctions of one-year loans are scheduled for this year, one in September and one in December, with their success depending on whether banks in turn make the money available to the private sector.

Weak recovery in sight

The ECB move came as the Paris-based Organisation for Economic Co-operation and Development (OECD) said in its latest World Economic Outlook report on Wednesday that a weak recovery is in sight but that damage from the crisis is likely to be long lasting.

The organisation's revised GDP forecasts predict a contraction of 4.1 percent for this year and 0.7 percent positive growth for 2010, both improvements on previous estimates.

"OECD activity now looks to be approaching its nadir, following the deepest decline in post-war history," says the report.

While the recovery is "likely to be both weak and fragile for some time" the report continues, the impact of the financial crisis "could have been worse" had it not been for the emergency measures that have been implemented.

"Thanks to a strong economic policy effort, an even darker scenario seems to have been avoided," it concludes.

No breakthrough at EU budget summit

EU leaders failed to reach agreement on the EU's long-term budget, as richer states and poorer 'cohesion countries' locked horns. The impasse continues over how to fund the Brexit gap.

EU leaders struggling to break budget deadlock

Cuts to innovation, space, neighbourhood and other programme-spending push down the latest budget proposal on the table of EU leaders. Rebates could stay on, to win the support of the net-payers for a deal.

Unhappy EU leaders begin budget haggle

EU leaders arriving at the Brussels summit criticised the budget proposal of EU Council president Charles Michel, as richer member states insisted holding onto their rebates, while poorer countries wanted to avoid deep cuts to their subsidies.

News in Brief

  1. Bulgarian PM investigated over 'money laundering'
  2. Greenpeace breaks into French nuclear plant
  3. Germany increases police presence after shootings
  4. NGO: US and EU 'watering-down' tax reform prior to G20
  5. Iran: parliamentary elections, conservatives likely to win
  6. Belgian CEOs raise alarm on political crisis
  7. Germans voice anger on rise of far-right terrorism
  8. EU leaders' budget summit drags on overnight

Vietnam sent champagne to MEPs ahead of trade vote

A trade deal with Vietnam sailed through the European Parliament's international trade committee and after its embassy sent MEPs bottles of Moet & Chandon Imperial champagne over Christmas.


Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Stakeholders' Highlights

  1. Nordic Council of MinistersScottish parliament seeks closer collaboration with the Nordic Council
  2. UNESDAFrom Linear to Circular – check out UNESDA's new blog
  3. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  4. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  5. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  6. Nordic Council of MinistersNordic Climate Action Weeks in December

Latest News

  1. No breakthrough at EU budget summit
  2. EU leaders struggling to break budget deadlock
  3. German ex-commissioner Oettinger lands Orban job
  4. How big is Germany's far-right problem?
  5. Plastic and carbon proposals to help plug Brexit budget gap
  6. Sassoli repeats EU budget rejection warning
  7. Why Miroslav Lajčák is the wrong choice for EU envoy
  8. Unhappy EU leaders begin budget haggle

Join EUobserver

Support quality EU news

Join us