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"Liquidity on the banking system has now increased considerably"
- Annalisa Piazza, market economist at Newedge Strategy
The European Central Bank allotted 489 billion euros in three year loans to 523 European banks at an average rate of 1 percent on Wednesday, exceeding forecast of 300 billion euros.
"The take-up was massive ... much higher than the expected 300 billion euros. Liquidity on the banking system has now increased considerably," said Annalisa Piazza at Newedge Strategy.
"It was obviously an offer the banks could not refuse," said Laurent Fransolet, head of fixed-income strategy at Barclays Capital in London.
"It shows the ECB is not out of ammunition and it gives banks security on liquidity for a few years. On the other hand it means banks will rely on the ECB for longer."