ECB launches new bid to drain liquidity from eurozone markets

0 Comments | AFP, December, 2007

FRANKFURT (AFP) — The European Central Bank said Friday it had removed a further 150 billion euros (220 billion dollars) from eurozone money markets through a new offer aimed at absorbing excess liquidity.

The offer had a fixed rate of 4.0 percent, the same level as the ECB's benchmark lending rate.

Fifty-two banks participated in the bidding operation, which is to come to maturity on December 31. The ECB on Thursday absorbed 145.64 billion euros from the market in a similar operation.

The ECB over the last few days has been providing liquidity for periods of two weeks or longer while mopping up excess cash in the shorter term to ensure that interbank lending markets are amply supplied -- but in a manner that does not fuel inflation.

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