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ECB eases lending rules in bid to appease banks
Date 09/10/2011 16:04  Author webmaster  Hits 1034  Language Global
• 09 OCT 2011

By Laura Noonan , in Berlin | Irish Independent  (ECB eases lending rules in bid to halt new crisis)

THE European Central Bank is reinstating two of its most powerful financial market interventions in a bid to prevent the latest eurozone woes from spiralling into another fully blown banking crisis.

ECB president Jean Claude Trichet revealed the exceptional measures yesterday, as he hosted a press conference after the last governing council meeting of his eight-year reign at the bank.

One of the supports will see the ECB offering banks unlimited 12-month loans in October and 13-months loans in December, giving banks greater certainty than the 90-day money usually on offer.

Bonds

The second scheme will see the ECB spend €40bn buying bank bonds in primary and secondary markets by October 2012, a measure that should reduce the banks' costs of issuing bonds.

The ECB also promised to maintain its shorter-term "main" lending operations at full allotment, or unlimited money at a fixed rate, until mid July at the earliest.

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