On Wednesday, 523 banks borrowed a total of 489 billion euros from the European Central Bank (ECB). The 3-year loans carry a low interest rate set at 1% and will hopefully keep cash flowing through the financial sectors. This is a record high amount for the ECB to lend.
Banks were given the opportunity to borrow as little or as much as they liked. Economists had estimated banks would borrow 293 billion euros, a much lower amount than what was actually borrowed.
Are these loans a step in the right direction for eurozone nations? The long term, low-interest loans are being received with mixed emotions. On one note, it’s refreshing to know the ECB has unlimited funds to offer to banks. On another note, the banking sector needs these unlimited funds. Many are wondering how the banks will spend the money and how it will affect the debt crisis.
News of the ECB lending to banks caused the Euro to gain slightly against the Dollar. Were you prepared?
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