Bloomberg News

ECB’s Knot Says LTRO Helped Avert Risk of Euro Bank Collapse

February 17, 2012

Feb. 17 (Bloomberg) -- European Central Bank council member Klaas Knot said said the three-year liquidity provision helped avert a “major credit crunch” as well as a possible collapse of a euro-region bank.

The so-called LTRO was “an unprecedented measure,” Knot said at an event in London today. “This helped prevent a sharp reduction in credit supply to the economy. It also took out one of the major risks that was hanging as a dark cloud over the economy, that a large internationally active institution would go bankrupt without the sovereign being sufficiently strong to stand behind its liabilities.”

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

To contact the editor responsible for this story: Simone Meier at smeier@bloomberg.net


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