ECB steps up emergency measures to head off debt crisis

Oct 6, 2011, 13:07 GMT

Berlin - European Central Bank chief Jean-Claude Trichet unveiled Thursday new emergency measures to help prevent the eurozone's debt crisis turning into a banking crisis.

Speaking at a press conference, Trichet said the bank planned to boost liquidity for the banks by introducing two 12-month Long Term Refinancing Operations (LTRO) with full allotment.

Trichet said that the 17-member eurozone faced 'particularly high uncertainty,' adding that the banking sector requires special attention.

While one LTRO has a maturity of 12 months in October, the other has a 13-month maturity in December.

Trichet said the bank had also decided to continue conducting its main refinancing operations as fixed rate tender procedures with full allotment for as long as necessary. This would at least until the end of the sixth maintenance period of 2012 on 10 July 2012.

He said it would also launch a 40-billion-euro (53.1 billion dollars) covered bond purchase programme, which are government loan-based debt. The purchases are to be made on the primary and secondary markets.

'The provision of liquidity and the allotment modes for refinancing operations will continue to ensure that euro area banks are not constrained on the liquidity side,' Trichet said.

Trichet called on eurozone banks to take steps to bolster their operations, including shoring up their balance sheets and avoiding high remuneration.