ECB Lends Record $622 Billion in Bid to Ease Crisis

ECB Lends Record $622 Billion in Bid to Ease Crisis

(Source WallStreet Journal) FRANKFURT -- The European Central Bank pumped a record €442 billion ($622 billion) into euro-zone money markets Wednesday in its first-ever offer of one-year funds as it battles the Continent's recession.
Euro-zone banks borrowed the one-year funds, the largest amount the central bank has ever dispersed in a single shot, at the ECB's current key rate of 1%. Much of the total likely substituted for amounts banks had been borrowing from the ECB for shorter periods, so the net stimulus to the economy is less than it appears at first sight.
The novelty lies more in the length of time over which the ECB is prepared to offer unlimited funding, reflecting a desire to bring longer-term money-market interest rates down. Although the risk premium that banks charge each other for funds has fallen since the dramatic days of September, it still appears big enough to strain the economy.

The ECB's move signals the central bank remains committed to bolstering the euro-zone economy even as policy makers world-wide discuss how best to unwind the welter of monetary and fiscal stimulus pumped into the global economy over the course of the crisis. The ECB believes the 16-nation euro-zone economy will start growing again by the middle of 2010.

The ECB said in May that it would begin offering banks funds for one year. Before Wednesday, the longest period banks could borrow from the central bank was six months.

ECB Official Faults New EU Regulation

ECB Official Faults New EU Regulation

(Source Wall Street Journal)The European Union approved a compromise plan Friday to create new financial regulators for the bloc, but a senior official at the European Central Bank that would head the new effort said the plan allowed too little power for the regulators to act.

The EU would set up a European Systemic Risk Council for the bloc, headed up by the president of the ECB. But, largely due to pressure from the United Kingdom, the body would only be advisory. Final decisions on financial-sector rescues would rest with the national governments called on to fund them.
The ECB should have "the possibility to act," Lorenzo Bini Smaghi, a member of the ECB's Executive Council, said Friday, addressing a conference in Milan.

Under the plan approved Friday by the bloc's 27 leaders at a summit in Brussels, the Risk Council would have "the powers to make recommendations but not to implement policies directly," he said.

French President Nicolas Sarkozy, who has pushed hard for greater regulation in response to the financial crisis, told reporters at the summit that he expected the proposed council to acquire greater powers over time.

"We've created a new EU institution from scratch. ... We could have gone further, but I believe that it will widen [its powers] through experience and practice, the way it's always happened," said Mr. Sarkozy. EU institutions and policies have often begun small and gathered powers over time. Read Article...
http://online.wsj.com/article/SB124541961471231443.html

ECB Says Euro-Region Banks May Lose a Further $283 Billion

ECB Says Euro-Region Banks May Lose a Further $283 Billion

June 15 (Bloomberg) -- Commercial banks in the 16-nation euro region may lose a further $283 billion by the end of next year as the financial crisis forces them to write off bad loans, the European Central Bank said.

“Hard-to-value assets have remained on bank balance sheets and the marked deterioration in the economic outlook has created concerns about the potential for sizeable loan losses,” the Frankfurt-based ECB said in its June Financial Stability Report today. ECB staff estimates suggest the total amount of potential write-downs over the period 2007 to 2010 “could amount to around $649 billion.” Some $365 billion have already been reported, it said.

Deutsche Bank AG, Germany’s biggest bank, has booked about $14.9 billion in writedowns and credit losses since the U.S. subprime-mortgage crisis began in the middle of 2007, less than $2 billion of which were related to subprime loans. Worldwide losses tied to distressed loans and securitized assets may reach $4.1 trillion by the end of 2010 amid the worst global recession since World War II, the International Monetary Fund said on April 21.

“There is no room for complacency because the risks for financial stability remain high, also bearing in mind that the credit cycle has not yet reached a trough,” ECB Vice President Lucas Papademos said at a press briefing in Frankfurt today. “Policy makers and market participants will have to be especially alert in the period ahead.”

The ECB expects the euro-region economy to contract by around 4.6 percent this year and 0.3 percent in 2010. Inflation is expected to average just 0.3 percent this year, the bank’s latest projections show.

“Banks should be encouraged to take advantage of the governments’ commitments for support and strengthen their capital buffers,” Papademos said. Still, because buffers have been maintained well above the minimum regulatory requirements, euro-area banks “appear to be sufficiently well capitalized to withstand severe but plausible downside scenarios,” he said. Read Article... http://www.bloomberg.com/apps/news?pid=20601087&sid=a9OppHNsK.I4

ECB ziet economie langzaam herstellen

ECB ziet economie langzaam herstellen

(Bron, De Telegraaf DFT) AMSTERDAM (AFN) - De neergang van de wereldeconomie lijkt over zijn dieptepunt heen. Nu steeds meer indicatoren wijzen op een mogelijke stabilisering van de economie, praat ook de Europese Centrale Bank (ECB) voorzichtig over een einde van de krimp.
“Na het extreem zwakke eerste kwartaal zal de economie in de rest van het jaar veel minder sterk verslechteren”, aldus ECB-president Jean-Claude Trichet donderdag na afloop van de maandelijkse rentevergadering van de ECB. “We verwachten positieve kwartaalcijfers vanaf de tweede helft van 2010.”

De positieve signalen over de wereldeconomie kwamen donderdag zowel uit de eurozone als de Verenigde Staten. In de eurolanden verkochten de detailhandelaren in april voor het eerst in vijf maanden weer wat meer dan in de voorgaande maand. In de VS was het aantal mensen dat een werkloosheidsuitkering aanvroeg vorige week lager dan een week eerder en nam de productiviteit per werknemer in het eerste kwartaal toe. Lees Artikel...
http://www.telegraaf.nl/dft/nieuws_dft/4083486/__ECB_ziet_economie_langzaam_herstellen__.html?p=25,1

ECB expected to cut rates to lowest level since the introduction of the Euro

ECB expected to cut rates to lowest level since the introduction of the Euro
(March 5, 2009)

Online and in real time: ECB press conference, from its premises in Frankfurt am Main, Germany.
At 2.30 p.m. CET the ECB President and Vice-President explain the Governing Council's monetary policy decisions and answer journalists' questions.
Webcast of ECB press conference on 5 March 2009
http://www.thomson-webcast.net/de/dispatching/?ecb_090305_stream_video

The European Central Bank has cut its main interest rate by a half percentage point to 1.5 percent amid increasingly grim economic news.

The Bank of England earlier Thursday cut its rates by a half percentage point to 0.5 percent.

Bank of England (BoE) expected to move towards Quantitative Easing (QE)

ECB cut base rates 0.50 points

European Central Bank cuts rates to 2 percent
European Central Bank cuts interest rates by half percentage point to 2 percent

FRANKFURT, Germany (AP) -- The European Central Bank cut its interest rates by a half percentage point to 2 percent on Thursday, moving to protect the continent's economy against a deep recession amid increasingly grim economic data.
The decision to cut the main refinancing rate from 2.5 percent was in line with market expectations and left the rate at its lowest level since December 2005. It followed a three-quarter point cut last month.
"Despite some apparent earlier reluctance to cut interest rates significantly in January after reducing them by 175 basis points over the previous three months, the ECB really had little option but to act again given the clear, widespread evidence that the euro zone recession is deepening," IHS Global Insight economist Howard Archer said after Thursday's decision.
With euro zone inflation heading lower, "the ECB had ample scope to cut interest rates further," he argued.
The ECB has now reduced interest rates on four occasions since October from a high of 4.25 percent, though it has stopped short of the more aggressive cuts enacted by the U.S. Federal Reserve and the Bank of England.


ECB expected to cut base rates at least 0.50 points (Thursday January 15th)
Mr. Trichet (and the ECB) does not really want to cut base rates with more than 0.50 points, but with the rapidly deteriorating economic situation in the Euro Zone he faces an immense outside pressure.
Stock Markets are down for the year (2009) with more than 10 percent.
Bank crisis deepens as ECB rate cut expected

FRANKFURT/TOKYO (Reuters) – Bank of America and Citigroup faced fresh turmoil as investors questioned if they had the capital strength to cope with a global crisis that is set to push the European Central Bank to cut rates later on Thursday.
Data across the developed world pointing to a deepening recession and fears that more public money in the United States may be needed to keep banks afloat weighed on financial markets.
Asian equities followed European and U.S. markets to fall to multi-week lows. Tokyo's Nikkei average slipped close to 5 percent after news that Japan's core machinery orders fell at a record pace in November.
Shares in Bank of America and Citigroup, two of America's biggest banks, fell as they faced a fresh crisis of confidence over whether they have enough capital to cover hemorrhaging losses from toxic assets and the struggling global economy.
"The large banks in the U.S. are not lending, and they're desperate to conserve capital," said Dan Alpert at Westwood Capital in New York. "Banks only remain going concerns because the federal government is topping up their equity."