ECB’s Constancio Says EU Banks Have Collateral

There is no shortage of ECB-eligible collateral in any euro zone country meaning that banks could easily increase their use of its funding if they so wished, ECB Vice-President, Vitor Constancio, said on Wednesday.

Money market rates and the euro have both risen in recent weeks as the amount of spare ECB cash that has long kept borrowing costs pinned at record lows has continued to dwindle.

“I can tell you, there is eligible collateral in all countries, in all banking sectors right now that they could use to come to us and get very cheap funding,” Constancio said at an event at the Goethe University Frankfurt.

He added that it was very difficult for the ECB to influence how banks used the cash, but said he hoped lending to the economy would pick-up once the recovery gathered momentum.

“If indeed the recovery consolidates, then 2015 can be a good year where the increase in demand and the repair in economic growth will find banks that are ready to lend, and that can create a virtuous circle,” Constancio said.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza