Eurozone banks deposit record 350 billion euros: ECB

Eurozone banks deposited a record amount of funds overnight with the European Central Bank, it said on Monday, a continued sign of distrust on the interbank lending market.

Commercial banks preferred to place 350.9 billion euros (416.7 billion dollars) in the ECB’s overnight deposit facility where they earned interest of 0.25 percent rather than lend the cash to each other at higher rates.

Banks have become wary of lending to each other again due to growing fears in the last month about heavy exposure to eurozone government debt.

The last record for overnight deposits placed with the ECB was 320 billion euros, set last week.

Before the global financial crisis erupted in August 2007, banks typically deposited a little more than nine billion euros in the ECB’s facility.

It allows commercial banks to keep money in a safe place, but means they earn less than if they lent the cash on interbank markets.