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ECB To Give New Emergency Credit Support To Banks

European Central Bank President Jean-Claude Trichet
The European Central Bank (ECB) has announced it is offering new emergency loans to banks to help steady the eurozone financial system.

Bank President Jean-Claude Trichet said on October 6 that the ECB would offer an unlimited amount of 12-month and 13-month credits, which will provide banks with funds for a longer period.

Many European banks are exposed to losses from the Greek debt bonds they've purchased. That makes borrowing between banks for their daily operations increasingly difficult because of fears the money might not get repaid.

Trichet also said the bank would buy up to 40 billion euros ($53 billion) in covered bonds, a type of security used by banks to raise funding. The ECB's move will help free up that market and make borrowing easier for banks.

Earlier, the ECB's governing council voted to leave the rate for its main refinancing operations unchanged at 1.5 percent.

The Bank of England similarly held its interest rates at a record low, but decided to release 75 billion pounds ($115 billion, 87 billion euros) of stimulus funds.

Later on October 6, German Chancellor Angela Merkel is due to meet with Christine Lagarde, head of the International Monetary Fund as well as the heads of the World Bank, OECD and G20 representatives in Berlin for talks on the eurozone debt crisis.

compiled from agency reports