Banks remain wary
December 27, 2011
The European Central Bank (ECB) has reported that eurozone banks deposited a record amount of overnight funds with it on Monday.
Banks put 411.8 billion euros ($538.5 billion) on deposit at the ECB. This beats the previous record of 384.3 billion euros seen in June 2010.
The high deposits indicate that eurozone banks remain reluctant to lend each other money.
Low interest
Money deposited with the ECB earns an interest rate of 0.25 percent, which is lower than the rate on the interbank market.
This comes a week after 523 banks borrowed a record 489.2 billion euros from the ECB ($639.7 billion) in three-year loans.
The ECB agreed to lend the cash to avert a possible credit crunch and charged just 1.0 percent interest.
Increased ECB lending
The ECB has stepped up lending to banks as the lender of last resort to help them through the crisis, as some banks are having difficulties raising money elsewhere.
The latest data suggest, however, that banks are simply parking the money with the ECB, despite the low interest received.
This is instead of lending it to other banks or investing some of it in eurozone government debt.
Author: Timothy Jones (AP, dpa)
Editor: Matt Zuvela