ECB extends US dollar facility beyond end-July

The European Central Bank said on Tuesday that it and other major central banks will continue to offer one-week US dollar funding beyond the end of July, continuing action to help the banking system.

The ECB governing council, “in cooperation with the Bank of England, the Bank of Japan and the Swiss National Bank, has decided to continue to offer one-week US dollar liquidity-providing operations after July 31, 2014 until further notice,” it said in a statement.

The dollar facilities were introduced during the financial crisis to enable banks to borrow US dollars from their central bank when access to the funds dried up.

But the central banks have been scaling back their emergency supply of US dollars to banks as economic and financial conditions improve.

Fewer and fewer banks have been making use of the facility in recent months amid signs that the crisis is fading and economies are gradually recovering.

As a result, banks have found it easier to obtain financing via financial markets rather than having to resort to the central bank.

The ECB said on Tuesday that it will regularly assess the need for dollar liquidity-providing operations.

The ECB had previously planned to conduct one-week dollar liquidity-providing operations until July 31, and had scrapped its three-month dollar liquidity providing operations as of April 2014.

Source: APP