European Central Bank Finally Wades in to Debt Crisis
December 21, 2011
This isn’t the backstop the market was hoping for, but it’s an important development nonetheless. Despite the ECB’s anti-sovereign debt buying rhetoric, providing record liquidity to Euro area banks demonstrates its commitment to solving the crisis. Whether banks use the funds to buy up higher yielding sovereign debt remains to be seen, but at least the ECB is getting more involved.
Hundreds of euro-zone lenders took out a total of €489.19 billion ($639.96 billion) in low-interest loans from the European Central Bank on Wednesday, as the currency area extended a massive financial lifeline to its struggling banking industry. The ECB said 523 banks borrowed under the central bank’s newly activated three-year lending facility, which has been dormant since the summer of 2009. The unexpectedly heavy demand for the loans highlighted the severity of the funding crisis, but simultaneously stirred hopes that the rescue will help defuse Europe’s two-year financial crisis – or at least prevent it from getting worse.
Read more in the Wall Street Journal.
The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.