FRANKFURT - The European Central Bank on Tuesday injected 7.7 billion euros (US$10.5 billion) into the money market to calm liquidity fears in the wake of the crisis in the US home loan sector. Later in the day it injected an additional 17.5 billion euros in its traditional monthly refinancing operation.
The Frankfurt-based ECB, which sets monetary policy in France, Germany, Italy and the 10 other nations that use the euro, had already injected more than 200 billion euros into the market over the last three trading days.
The fresh cash allows commercial banks to borrow from the central bank to meet their liquidity needs.
"The ECB notes that money market conditions are now close to normal," it said, seeking to reassure rattled investors.
But it said ahead of the cash injection that it was "still offering the
opportunity to cover any remaining liquidity needs" before loans to European banks come due this week.
The moves are designed to head off a credit squeeze linked to turmoil in the US sub-prime, or high-risk, mortgage market.
Stock markets around the world rallied Monday in response to the coordinated action of the ECB, and the US and Japanese central banks.
But Tuesday the bourses in London, Paris and Frankfurt opened lower amid continued uncertainty over the possibility of a global credit crunch. - AFP/ir
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