Draghi Wants ECB Panel To Explore New Bank Funding Measures

Mario Draghi has asked a European Central Bank panel to study options for new bank funding measures, as policy makers try to figure out how to deal with any future liquidity shortages, two euro-region central bank officials said.

While the ECB president insisted that the institution “stands ready to act according to need,” the governing council agreed that a technical committee should examine the size and maturity of new long-term refinancing operations, as well as other instruments, the officials said yesterday, speaking on condition of anonymity because the matter is confidential. The panel has no set date for a verdict, one official said.

The ECB is trying to make cash operations available to banks in case increases in money-market rates caused by the winding down of stimulus by the U.S. Federal Reserve threaten the economic recovery. Draghi fueled expectations of a fresh round of long-term loans on Sept. 23, when he said that officials could deploy a new LTRO if needed.

“The intention of the governing council is to provide liquidity assurance to the banking system,” Draghi said at a press conference after the ECB kept its benchmark interest rate on hold at a record low of 0.5 percent in Paris yesterday. “Nobody wants to have a liquidity accident standing between now and a recovery.”

Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.