The European Central Bank today announced new measures to help euro zone banks with additional liquidity in a bid to avert a possible credit crunch in the single currency area.
ECB President Jean-Claude Trichet said the bank's decision-making governing council "has decided to conduct two longer-term refinancing operations -one with a maturity of approximately 12 months in October and the other with a maturity of approximately 13 months in December."
In addition, the ECB would relaunch its so-called covered bond programme, Trichet said.
He called on Europe's banks to bolster balance sheets, amid concerns the euro zone debt crisis could escalate into a credit crisis.
He said the ECB "urges banks to do all that is necessary to reinforce balance sheets and where necessary they should take full advantage of government support measures which should be made fully operational."
The ECB earlier kept rates unchanged at 1.5% at its meeting in Berlin, the last for Trichet before he hands over to Mario Draghi, currently Italy's central bank governor.
The ECB President said that the bank's rate-setting council had weighed up the merits of reducing interest rates but eventually decided to hold steady at 1.5%.
There was a "discussion of the pros and cons of decreasing rates as well as the pros and cons of maintaining rates where there are," Jean-Claude Trichet said.
Many economists think the bank has only postponed a cut to stimulate the euro zone's economy, which shows signs of a slowdown. They think a cut will come later this year.
The rates decision came just hours before German Chancellor Angela Merkel was to host talks with other top officials on threats to the financial global system.
Banks are threatened with losses from a potential default on government debt by Greece since some of them hold those bonds. That has made banks afraid to loan money to each other for fear they will not be paid back.
Some banks are struggling to fund their day-to-day operations and remain dependent on last-resort loans from the ECB.
The IMF said that it believes the euro zone could benefit from lower interest rates and echoed concerns raised by the ECB.
A spokesperson also for the fund also said they "fully supports" the ECB's new measures to help euro zone banks with additional liquidity in a bid to avert a possible credit crunch.
Earlier, the Bank of England similarly held its interest rates at a record low, but decided to pump out another £75 billion sterling of stimulus under its quantitative easing policy.
