ECB wants liquidity to reach real economy faster

and Monetary Affairs.
In two separate long-term refinancing operations, or LTROs, in December and February, the ECB pumped more than one trillion euros (US$1,3 trillion) into eurozone banks in a bid to avert a dangerous credit crunch.
The money was made available to banks at rock-bottom interest rates in the hope they would lend it on to households and businesses, thereby keeping the eurozone economy up and running.
But available data so far appear to suggest that lending activity remains low and banks are tending to park the cash on deposit at the central bank rather than loaning it out.
Draghi insisted the process would take some time.
“We are confident that central bank liquidity has come very close to the real economy.
“Of course, this does not mean that this will by itself boost lending to firms and households,” he said in a regular hearing.
“It is encouraging to observe that a very large number of small banks have participated in the two LTROs.
“Small banks are best placed to refinance the real economy, in particular small and medium-sized firms which are the biggest generator of employment in the economy,” he said. — AFP.