December 15, 2011
Eurozone governments are facing disappointment for their hopes that banks in the region would use new longer-term finance offered the European Central Bank to buy up beleaguered sovereign bonds.
Bankers say big European banks are unlikely to buy more government debt using the three-year loans on offer from the ECB for the first time next week.
The ECB announced earlier this month that it would make three-year loans to the region’s banks, in an effort to provide a lifeline to lenders locked out of public funding markets. About half of the €614bn worth of longer-term loans last offered by the ECB back in 2009, with a one-year term, is estimated to have been used to buy sovereign debt, mostly from eurozone peripherals like Greece and Spain.
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