Commodity Online
BRUSSELS : Continuing with its efforts to ease the expanding credit crisis, the European Central Bank on Wednesday pumped $100 billion more back into interbank money markets in one-day loans.

The ECB also provided one-week dollar loans at a fixed rate of 2.277 percent, with banks signing on for a total of $170.9 billion.

The dollar operations have become regular events aimed at keeping the US currency flowing through the vital global financial pipeline.

Euro zone commercial banks paid an average of 1.94 percent for the one-day which the ECB got from the US Federal Reserve through a reciprocal currency exchange known as a swap.

Banks had bid for a total of more than 120 billion dollars in that operation, the ECB said, indicating sustained demand for the US currency.

On Monday, the ECB said it would provide an unlimited amount of dollars to eurozone banks in one-week, one-month, and three-month loans at a fixed rate of interest that economists said should serve to calm tension on the markets.

Commercial banks normally lend and borrow cash from each other on interbank markets but these have dried up since the US market for high-risk, or sub prime, mortgages collapsed more than a year ago.

The ECB and other major central banks have been providing huge amounts of cash in the form of loans in all major currencies to ease turmoil stemming from the latest crisis in the US financial sector.

That began when the investment bank Lehman Brothers declared bankruptcy on September 15.