La BCE atteint un record dans les prêts aux banques[en][de] 

The massive loan to eurozone banks at a flat rate of 1% marks the latest step in the ECB's efforts to get liquidity flowing and fend off the impact of the financial market crisis.

The loan represents about 70% of the ECB's outstanding liquidity operations and 5% of eurozone economic output, and analysts said the generous supply of funds should bring down money market rates.

"It's an extremely generous offer from the ECB which you don't see from other central banks. It's something which should help to keep down 12-month Euribor rates," Barclays Capital economist Julian Callow told Reuters.

"This is all about giving banks confidence in the term structure of their liabilities to ensure they can keep giving loans," he said.

Bank-to-bank interest rates are already at record lows in key maturities, with the 12-month bank-to-bank fixing at 1.5% on Wednesday, compared to a peak of 5.5% last October.

The euro and shorter-dated eurozone government bond yields briefly fell to session lows when the ECB announced the results of the keenly-awaited operation, and shares picked up.

The tender of 12-month funding slashed demand for the ECB's three-month funds and other shorter-term operations.

Banks took just 6.4 billion euros in the ECB's latest three-month tender on Wednesday, a net drain of funds compared to the operation in March (which the tender is replacing) when banks took 28.8 billion euros.

Demand at the regular weekly operation, announced earlier, was the lowest since the ECB began meeting all bids in refinancing operations last October.

The ECB announced last month it would double the maximum length of time it lends money to a year from six months previously. This is the latest attempt to restore order to the euro zone's money markets and to reduce the cost of borrowing for banks, firms and consumers (EurActiv 08/05/09).

(EurActiv with Reuters.)