The European Central Bank (ECB) commenced a three day tender process to inject cash into the stricken Eurozone banking system. In what it describes as a “fine tuning operation”, the ECB attempts to bring some form of stability to banks, following the unfavourable effects caused by the fallout from the US subprime mortgage crisis on credit markets worldwide.
This emergency funding amounts to €61.05 billion, a follow-up to Thursday’s injection of €94.8 billion. Liquidity problems have prompted these drastic moves, with fears that that markets were on the verge of drying up, and restricting short term funds for banks. Thursday’s injection figure surpassed all others in the history of the ECB, even greater than the €69 billion sum made available to banks the day after the September 11th terrorist attacks in 2001.
The US Federal Reserve has also granted $24 billion to US markets, in the hopes of offering a more secure environment to banking institutions.
However European stock markets continued to drop, with much of the deterioration in the banking sector. Commerzbank has fallen by 4.7% and Deutsche Bank by 6.1%. Meanwhile French bank, BNP Paribas has placed a stop on withdrawals from three of its major investment funds on foot of liquidity struggles.