Banks Draw 530 Billion Euros From ECB

Eight hundreds banks drew 530 billion euros in cheap short-term loans from a new ECB facility. It is the second such facility established in less than half a year.

The facility is meant to bolster bank balance sheets weakened by their holding of the region’s sovereign debt. The ECB also hopes banks will use the new capital to buy, ironically, more sovereign debt to keep down the borrowing costs of the mot troubled nations in the region. In addition, the ECB expects the banks to loan the money out to create a create environment which will promote business and consumer activity

With a new recession in the region firmly in place, banks may elect to keep the money for a “rainy day”