The European Central Bank’s (ECB) three-year bank loan programme has been signed up for by a total of 800 banks around Europe.
The European Central Bank’s (ECB) three-year bank loan programme has hit a phenomenal total of €1trillion in only its second stage of the series.
It was designed to provide banks with a convenient loan offering a tempting 1% interest with the intention to try and ease them out of Eurozone debt crisis, therefore improving their liquidity. Due to this a total of 800 banks around Europe signed up for the loan.
Although, no details in relation to the distribution of funds have been published by the ECB, two-thirds of the volume went to three main countries, thought to be Spain, France and Italy. It was also alleged that an Italian bank took the largest cut with €24bn, double the amount it took in the first stage in December, whilst a UK bank scooped €11.4bn which was the largest cut outside of the euro-zone.
Although the vast majority of bank chief executives praise this programme for injecting liquidity into the market, many have since criticised the impact these loans will have on the debt crisis. Peter Sands, the chief executive of Standard Chartered, stated that: “[these loans]…risk laying the seeds for the next crisis”. There has been further criticism around the unknown exit strategy these loans will create in years to come.
Although analysts have stated that the loans show little signs that we are returning to the former economic state, there has been a sharp rise in Portuguese yields.