Markets unlikely to cheer as ECB offers cheap money to struggling banks
THE European Central Bank (ECB) will hand out bundles of cheap three-year money to the eurozone's battered banks this week, but the response to its offer of unlimited funds may not bring markets much festive cheer.
Europe's intensifying debt crisis has forced the ECB to extend and expand support measures for banks in the euro area that have found it harder to borrow in the interbank market because of their large sovereign debt exposures.
A rush by them to borrow the new money could underscore the scale of the problem.
"Is a lot of money enough to be reassuring, or will it scare the living daylights out of people?" said Nick Parsons of National Australia Bank, who readily admitted to not knowing the answer.
A teleconference of eurozone finance ministers today, being held to discuss developments since the EU leaders' summit, and ECB president Mario Draghi's address to the European parliament, could also spoil any holiday mood. (Reuters)