FRANKFURT: Banks will return 1.215 billion euros ($1.58 billion) of crisis loans early to the European Central Bank next week, after the central bank assured markets it would keep interest rates low for an extended period.
ECB President Mario Draghi said last Thursday the central bank's decision to issue 'forward guidance' was driven by market volatility, which took hold after the Fed last month set out a plan to begin slowing its stimulus.
The ECB has also promised banks to hand out unlimited amounts of liquidity until at least July of next year.
Banks took over 1 trillion euros of three-year loans from the ECB in two LTROs in December 2011 and February 2012, of which the first matures in January 2015. They now have the option to repay the loans early and have returned almost a quarter of the money already.
On Friday, the ECB said 2 banks would repay 513 million euros from the first LTRO on July 17 and 5 banks will pay back 702 million euros from the second LTRO. A Reuters poll of euro money market traders had expected banks to return 2 billion euros next week.
indiatimes.com
ECB President Mario Draghi said last Thursday the central bank's decision to issue 'forward guidance' was driven by market volatility, which took hold after the Fed last month set out a plan to begin slowing its stimulus.
The ECB has also promised banks to hand out unlimited amounts of liquidity until at least July of next year.
Banks took over 1 trillion euros of three-year loans from the ECB in two LTROs in December 2011 and February 2012, of which the first matures in January 2015. They now have the option to repay the loans early and have returned almost a quarter of the money already.
On Friday, the ECB said 2 banks would repay 513 million euros from the first LTRO on July 17 and 5 banks will pay back 702 million euros from the second LTRO. A Reuters poll of euro money market traders had expected banks to return 2 billion euros next week.
indiatimes.com
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