ECB Maintains Umbilical Cord

The Financial Times this morning speculates that European banks will continue to use the European Central Banks’ three year cheap funding facility when a new tranche of money becomes available at the end of next month.

A number of anonymous banking heads have indicated that up to a trillion euros could be borrowed.

A key factor in their decision making is that the fact that this facility has been de-stigmatised in terms of its implications for the creditworthiness of the banks concerned.