22 Dec 2011

ECB loans rushed by banks

9:56 am on 22 December 2011

Eurozone banks have rushed to take out cheap three-year loans offered by the European Central Bank, borrowing 489 billion euros ($US643 billion).

The ECB originally hoped to lend up to 450 billion euros to stop another credit crunch crippling the banking system.

But over 500 banks raced to borrow from the scheme, which was far beyond expectations.

When the plan was announced, President Nicolas Sarkozy of France said banks could use the money to invest in eurozone sovereign debt.

However, analysts are uncertain if banks will use the money in this way.

The offer was the largest amount of money the ECB has injected into the financial system, beating the 450 billion euros in 2009.

Although the offer was seen as a success, the BBC reports its impact on the eurozone economy is still uncertain.