Friday, May 16, 2008

ECB concern over liquidity scheme


By Paul J Davies and Norma Cohen in London and Anousha Sakoui in Vienna
Published: May 15 2008 23:37 | Last updated: May 15 2008 23:41

The European Central Bank on Thursday voiced its “high concern” at growing evidence that banks are exploiting its efforts to unblock the frozen funding markets by using its liquidity scheme to offload more risky assets than it envisaged.

Yves Mersch, a governing council member, said the ECB was now “looking very hard at whether there is not a specific deterioration of collateral” which the central bank is accepting in return for funds.

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