BRUSSELS (MNI) – The European Central Bank’s E1 trillion of cheap
three-year loans to banks have “circulated enormously” within the
Eurozone, ECB Vice-President Vitor Constancio said on Wednesday.
“Banks that borrowed most in those two operations are no longer by
far the banks that have with us the most significant deposits,”
Constancio told the European Parliament’s Economic and Monetary Affairs
Committee. “Not the same banks, not even the same banking sectors. The
[LTRO] money has circulated in the whole euro area,” he said.
In net terms the ECB’s Long Term Refinancing Operations increased
the central bank’s financing of the banking system by about half the
headline E1 trillion figure, since banks stopped using other,
shorter-term forms of funding to take advantage of the ECB’s offer,
Constancio explained.
About half of that roughly E500 billion was used by European banks
to refinance the E230 billion of bonds that came up for redemption in
the first quarter of this year, the ECB vice president said.
–Brussels Newsroom, +324-952-28374; pkoh@marketnews.com
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