Euro Dives On Jitters About European Bank Loan RepaymentsSubmitted by emalvini on Fri, 01/18/2013 - 13:58
Euro Dives On Jitters About European Bank Loan Repayments
Matthew Boesler | Jan. 18, 2013 | 8:47 AM
The euro fell sharply against the dollar around 7:45 AM. The move is being connected with comments made by ECB Executive Board Member Benoît Cœuré around the same time about LTRO repayments.
There's been chatter about European banks possibly beginning to repay loans early to the ECB from the central bank's LTROs (long-term refinancing operations) initiated in 2011. The loans were offered to troubled eurozone banks to boost liquidity in the banking system.
Early repayments of the loans would likely put upward pressure on interbank borrowing rates, because banks would have to turn elsewhere for short-term funding.