ECB's bank funding boosts euro, stocks
A giant symbol of the European Union's currency, the euro, stands outside the headquarters of the European Central Bank in the central German city of Frankfurt am Main.
TEXT OF INTERVIEW
Steve Chiotakis: The European Central Bank -- the ECB -- just completed an important move to fund 171 banks in Europe. Marketplace's Stephen Beard is with us live from London to help us understand what that means. Good morning, Stephen.
Stephen Beard: Hello, Steve.
Chiotakis: So we know that investors have been worried about the health of banks there in Europe. How much did they borrow from the ECB?
Beard: Well, just $160 billion. Now let me explain this. The European Central Bank has been propping up the European banking system, providing billions of dollars worth of emergency credit. But it wants to start weaning the banks off that credit to get them to stand on their own two feet. So, it is said that tomorrow it is going to refuse to renew more than $500 billion worth of one-year loans. Instead, it says the banks can have cash for a shorter term -- three months. Well, today they opened that window and the banks asked for just $160 billion. Much less than expected.
Chiotakis: And that seems like good news, no?
Beard: The markets certainly seem to think so. European bank stocks are up this morning and the euro jumped more than half a cent. Yes, this does suggest that European banks are not as badly off, as strapped for cash, as many people have feared. But we've seen many faulted loans before. And one analyst I spoke to this morning said to fully restore confidence in the European system we're going to have to see all the results of those European bank stress tests, which won't be due out until the end of July.
Chiotakis: All right, Marketplace's Stephen Beard reporting live in London. Stephen, thanks.
Beard: OK Steve.