According to estimates, banks would be returning nearly Eur1.124 billion or US$1.45 billion of bailout funds to the European Central Bank by next week after the ECB had cut the interest rates on borrowing to a record low of 0.5% earlier this month,
In a statement, ECB President Mario Draghi said after its policy meeting held this May that the ECB is ready to reduce the interest rates further to nearly zero. This would result in banks being charged to hold their money overnight.
The current economic information available though has projected a less than rosy landscape of the recession hit European economy. According to Eurostat, the Euro zone has been in a recession for a sixth straight quarter at the start of 2013. Many economists do not expect any growth to occur in the next year or so.
During this May meeting, the ECB further decised that it would extend its provision of unlimited funds available to banks, saying that it would provide as much liquiidity as possible until quite possibly July 2014, allowing for greater funding assurance for the banks.
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