Today, the European Central Bank (ECB), in the interest of encouraging banks to "maintain and expand their lending to clients," "help to improve market liquidity in important segments of the private debt security market, and to ease funding conditions for banks and enterprises," announced the following actions:

  • The Eurosystem will purchase euro-denominated covered bonds issued in the euro area with details to be announced after the June 4, 2009 Governing Council meeting; 
  • The European Investment Bank will become an eligible counterparty in the Eurosystem’s monetary policy operations, effective July 8, 2009, under the same conditions as any other counterparty; and 
  • The ECB will conduct liquidity-providing longer-term refinancing operations with a maturity of 12 months, conducted as fixed rate tenders with full allotment. The rate for the first of these operations (which will also be the rate on the bank's main refinancing operations at that time) will be announced on June 23, 2009.

Separately, in light of the fact that the "global banking and financial system remains fragile," the Bank of England's Monetary Policy Committee today voted to continue with its program of asset purchases (government and corporate debt) financed by the issuance of central bank reserves and to increase the size of the program from £75 billion to £125 billion.