ECB to loan a further €40 Billion to Banks

 

The ECB has announced a new round of emergency loans to banks in a bid to try and resolve eurozone's financial crisis.

At a press conference yesterday the European Central Bank President, Jean-Claude Trichet, introduced details of the €40 Billion and urged banks to do all that they could to bolster their balance sheets.

The ECB allowed eurozone interest rates to remain at 1.5% as inflation was expected to stay elevated. This now represents the third consecutive month that the ECB has not changed rates, after raising them from 1.25% in July.

The move comes at a time of much speculation that European leaders are preparing an action plan to boost the banking system and are close to announcing plans to recapitalise banks.

Earlier thsi week, German Chancellor Angela Merkel, spoke of being in favour of a co-ordinated recapitalisation of European banks if needs be.