ECB resumes dollar loans to eurozone banks

11th May 2010, Comments 0 comments

The European Central Bank on Tuesday resumed loans of US dollars following an agreement with the US Federal Reserve that is part of a massive European Union (EU) plan to save the euro.

The ECB loaned 9.2 billion dollars (7.2 billion euros) to seven eurozone banks at a fixed rate of 1.22 percent, a statement said.

Central banks in several countries agreed over the weekend to swap currencies for dollars provided by the Fed to ease tension on interbank lending markets caused by the eurozone debt crisis.

On Monday, the ECB announced several measures aimed at financial markets, including the resumption of six-month loans in euros and the purchase of public debt, something it had refused to do until now.

The exceptional moves were part of a larger plan drawn up by the EU and the International Monetary Fund to help troubled troubled eurozone countries worth up to 750 billion euros (almost one trillion dollars).

The dollar loans were agreed upon after it became more difficult for eurozone banks to obtain the US currency owing to reluctance on the part of US banks to lend it, economists said.

The procedure was also used following the collapse of the US investment bank Lehman Brothers in September 2008.

- Dow Jones Newswires contributed to this story -

© 2010 AFP

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