The European Central Bank may have been slammed for failing to act as a lender of last resort to the eurozone’s crippled economies - but when it comes to Europe’s banks, it does seem able to do enough.
Since taking the helm from Jean-Claude Trichet last year, the ECB’s new chief Mario Draghi, and his team, have pumped unprecedented liquidity — cheap money — into the European banking system. Just before Christmas nearly 500 billion euros in three year loans flowed into the system.
Draghi has promised even more funding in February — if necessary — fearful no doubt of another credit crunch similar to that which hit the system when Lehman Brothers collapsed in 2008.
For now though, commercial banks still seem scared to lend despite being awash with ECB money. Many are parking much of it right back with the central bank.
The latest downgrade of the eurozone’s sickliest economies by Standard & Poor’s is unlikely to help foster confidence inside the banking sector.
For further insight on how the ECB is trying to stem the eurozone’s debt crisis, euronews’ Isabel Marques da Silva spoke to the ECB’s Vice President Vítor Constâncio.
To see the full interview, click on the link above.
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