HOPES THAT ECB LENDING WILL KICKSTART CREDIT - The European Central Bank's first offer of three-year loans is expected to draw high demand from banks later today.
Banks are being urged to take the funds as part of concerted efforts to ease severe strains across the euro zone's financial system.
The ECB announced the emergency three-year loans, known as longer-term refinancing operations, or LTROs, earlier this month, in an attempt to help banks to overcome €720 billion worth of funding due to mature next year.
John Finn of Treasury Solutions said lack of funding for banks led to lack of lending to companies. He said the hope was that this money from the ECB would flow back to businesses and households across Europe.
Mr Finn said that when such special lending started in 2009, the banks took the money at low interest rates and invested it in higher-yielding government bonds. He said the Government would have to monitor banks to ensure that they made credit available this time.
Mr Finn said he still believed access to credit in many areas was a problem fir Irish firms. He said one company recently pulled out of a tender process for a contract in the US because it could not secure foreign exchange finance from a bank to manage its risks.
Mr Finn said availability of credit for mortgages was almost as important for economic recovery as lending to SMEs. He said he believed Ireland was ready to recover if credit could start flowing again.
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CURRENCIES - On the currency markets, the euro is trading at $1.3114 and 83.67p sterling.
