Breakingviews-ECB funding aid needs to be wider, not just longer

Fri Nov 25, 2011 10:10am GMT

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By George Hay

LONDON Nov 25 (Reuters Breakingviews) - The central bank is considering offering longer-term loans to the euro zone’s stricken lenders. Bankers also want it to broaden the pool of collateral it will lend against. Though the ECB will not want to get swamped, easing some rules might help prevent small banks going bust.

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CONTEXT NEWS

-- The European Central Bank is considering extending its long-term refinancing operations to last two or three years, people familiar with the matter told Reuters on Nov 24.

-- The largest 111 Italian lenders had at least 92 billion euros of eligible ECB collateral net of haircuts at the end of August, the Bank of Italy revealed in its Financial Stability Report on Nov 2. The other 650 Italian banks held collateral worth 46 billion euros, net of haircuts.

-- The ECB should widen the pool of eligible collateral for Italian banks accessing its open market operations, UniCredit chief executive Federico Ghizzoni told Corriere della Sera on Nov 16.

-- Reuters: EXCLUSIVE-ECB mulls ultra-long loans to help banks [ID:nL9E7G9016]

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

-- For previous columns by the author, Reuters customers can click on [HAY/]

(Editing by Peter Thal Larsen and David Evans)

((george.hay@thomsonreuters.com)) Keywords: BREAKINGVIEWS ECB/

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