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ECB ready to help banks even as it hopes for calm after Swiss deal

cde.news desk 20 March 2023, 06:00 · 1 min read

epa07419964 (FILE) - The European Central Bank (ECB) in Frankfurt Main, Germany, 27 April 2017 (reissued 07 March 2019). The European Central Bank on 07 March 2019 indicated it would not raise the eurozone interest rates until in 2020, while announcing new stimulus measures to boost the single currency area economic growth. ECB President Mario Draghi said the eurozone is 'in a period of continued weakness and pervasive uncertainty. The near-term growth outlook will be weaker than previously anticipated'. EPA-EFE/ARMANDO BABANI

FRANKFURT (Reuters) – The European Central Bank remains ready to support euro zone banks with loans if needed, ECB President Christine Lagarde said, adding that the Swiss-brokered rescue of Credit Suisse was “instrumental” for restoring calm to the markets.

Investors have been concerned about the impact of Credit Suisse’s debacle on euro zone banks despite the ECB’s repeated reassurance that lenders in the 20 countries that share the euro are solid.

Lagarde repeated that euro area banks were “resilient, with strong capital and liquidity positions” but said the central bank was ready to step in if necessary.

“Our policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy,” she said in a statement.

The ECB has in the past provided banks with ultra-cheap, multi-year loans known as Targeted Longer-Term Refinancing Operations, as well as Emergency Liquidity Assistance, which can be provided by the 20 national central banks of the euro zone against a broader palette of collateral.

Lagarde welcomed “the swift action and the decisions taken by the Swiss authorities”, which orchestrated Credit Suisse’s takeover by rival UBS.

“They are instrumental for restoring orderly market conditions and ensuring financial stability,” she said.