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The E.C.B. is providing unlimited three-year credit on easy terms to banks, against a wide range of collateral.
When the ECB intervenes in money markets to shape interest rates, it accepts a wide range of collateral, including less liquid assets such as mortgage-backed securities.
On Monday, meanwhile, the Fed held its final auction through the Term Auction Facility, which was created in December 2007 to offer banks short-term loans against a wide range of collateral.
The European Central Bank, which has been widely criticized for refusing to directly support struggling euro zone governments, on Dec. 8 did announce a major new initiative to help banks, longer-term refinancing operations, saying it would provide unlimited three-year credit on easy terms against a wide range of collateral.
Introduced last year, the program, the Funding for Lending Scheme, allows British banks that extend credit to borrow from the Bank of England, against a wide range of collateral, at an annual interest rate as low as one-quarter of a percent.
One reason the ECB could lend liberally was because it accepts a wide range of collateral, including corporate and asset-backed bonds.Special report Only human CSI: credit crunch Heroes of the zeroes Talk is expensive Fast and loose Assets and their liabilities On credit watch Smash the glass Amid the gloom Expect a lot... Sources ReprintsOffering less pukka security is not costless.
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It also said it would accept a wider range of collateral for those loans.
The government has also urged them to accept a wider range of collateral.
Carney said the Bank would offer money over longer periods, accept a wider range of collateral and charge lower fees.
The firms will also be able to pledge a wider range of collateral to borrow from the Fed than they could as investment banks.
In a nutshell, they want the central bank to make more money available at longer maturities and against a wider range of collateral.
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