Europe Economy

ECB Lends Banks $104 Billion

The European Central Bank lent commercial banks 75 billion euros ($104 billion) in three-month funds Wednesday, 25 billion euros more than in a previous operation last month, the bank said on its Web site.

The average interest rate paid was 4.5%, slightly lower than in a previous auction for three-month deposits last month, but the amount allotted shows that commercial banks are still worried that the U.S. subprime crisis could affect money markets.

The ECB's Web site did not give details of the applicants for the funds, but the Financial Times said 140 banks had applied for 139 billion euros, in a sign that institutions in the money market remain wary of lending to each other and prefer to borrow from the central bank.

The bank drained 60 billion euros from the money market on Tuesday, signaling it was getting more confident that the liquidity crisis was nearing an end.

Also on Tuesday, ECB President Jean-Claude Trichet said the European financial system was still sound despite the current turmoil in credit markets and reiterated the bank was ready to act to ensure the smooth functioning of the markets.

Last month, the ECB lent banks a total of 90 billion euros in two separate auctions for three-month deposits.