Local lenders drew between 20 and 25 billion euros from the European Central Bank?s 489-billion-euro cash injection on Wednesday, according to bank officials? estimates.
The 20-25 billion euros local lenders have accessed will be used to replace other loans and do not have to be returned for another three years.
The auction concerned three-year loans, with the participation of 523 European lenders which secured much more cash than the 310 billion euros originally estimated by analysts.
A few weeks ago the ECB?s governing board decided to reintroduce the long-term funding process in order to supply some desperately needed liquidity to the credit system.
Due to the deterioration of financial conditions and the uncertainty caused by the debt crisis, the interbank market in Europe has virtually seized up while credit crunch conditions in the eurozone have made it hard for enterprises and households to access loans. In Greece the situation is even worse, as liquidity in the local market shrank by about 80 billion euros in the January-October period. Bank of Greece data showed yesterday that credit went down by 6.7 billion euros at the end of October from the end of 2010, while deposits shrank by 33.2 billion euros during the same period.