2 Oct 2008

ECB offers more short-term funds to banks

5:57 am on 2 October 2008

The European Central Bank has offered another $US50 billion in one-day funds to commercial banks as it tries to keep cash flowing in the money markets.

Strong demand was reported on Wednesday, with 61 bidders seeking nearly $US71 billion, at 3.25%.

In a separate move, which the bank called a "fine-tuning operation," the ECB siphoned $US244 billion out of eurozone markets at a rate of 4.25%.

The ECB and other major central banks have been injecting huge amounts of cash into the money markets to ease the turmoil stemming from the crisis in the US financial sector.

On Monday, the ECB and the US Federal Reserve agreed to double the amount of funds they traded with each other, to a total of $US240 billion.

That will allow the ECB to provide more dollars directly to eurozone banks.