Brussels, 13/09/2001 (Agence Europe) - The Governing Council of the European Central Bank (ECB) decided on Thursday to maintain its key rates unchanged, which demonstrates the ECB's determination not to react in a hasty way to the consequences of the series of attacks on the United States (see yesterday's EUROPE, pp.8/9). The minimum bid rate applied to refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.25% , 5.25% and 3.25% respectively. In its comments, the ECB says it is convinced that the "fundamental strength and resilience of the US economic system will not be impaired by recent events".
The ECB also confirms that the Eurosystem "stands ready to support the normal functioning of markets". In this context, the ECB announced on Thursday that it had, for the second time in two days, injected an additional liquid EUR 40.495 billion into the financial circuit, thanks to a rapid call for offers. This exceptional bank refinancing operation, with a minimum 4.25% rate, allowed the demand of 45 banks to be met. On Wednesday, the Frankfurt Institute had done the same, adding EUR 69 billion for 65 banks. Most of the major central banks in the world, mainly the American Federal Bank and the Bank of Japan, carried out similar operations. These initiatives aim to quell several fears: a move to withdraw liquid assets from bank accounts, a lack of liquidity on share markets and a drying up of financing sources for banks and enterprise, given the closure of the Wall Street Stock Exchange.
Furthermore, in order to facilitate the functioning of financial markets and provide dollar liquidity, the ECB announced on Thursday that is has concluded a "swap" with the US Federal Reserve (FED). The agreement, to last 30 days, allows the ECB to have $50 billion available and, in exchange, the Federal Reserve in New York may use an equivalent amount in euros. The ECB will make its deposits available to national central banks in order to help them face up to their needs in dollar liquidity, following the attacks on the United States on 11 September.