ECB receives record cash deposits

The ECB has received record cash deposits of 412bn euros from banks over Christmas.


The BBC reports:
"The total beat the previous record of 384bn euros set in June 2010.

It comes just after the ECB gave eurozone banks 489bn euros of three-year loans to try to ward off a fresh banking crisis and credit crunch.

Cash from those loans arrived in the banks' accounts on Friday just before Christmas.

The ECB's decision to offer three-year loans - as well as a significant broadening of the types of collateral that the ECB would accept from the banks as security for its loans - had appeared to settle financial markets in the run-up to Christmas.

Prior to the ECB's interventions, there had been growing fears in the international financial community that a major European bank was about to run out of money and go bust, threatening to spark a full-blown market meltdown.

The ECB has in effect had to fill the role of a safe intermediary in the market for short-term cash loans between the banks - which is crucial to their functioning - by receiving their spare cash as deposits, and then lending it back out to those banks that find themselves short of ready money."