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ECB injects billions into the eurozone banking system

Amid signs that liquidity has not yet recovered in the European money markets it was today revealed that the ECB (European Central bank) has pumped in over €440 billion in an effort to inject activity and security into the European economy. The funds were introduced in the form of one-year bonds with an interest rate of just 1% which equates to around €1300 per European citizen.

This €440 billion injection dwarfs the previous largest figure of €95 billion in August 2007 when the economic downturn first began. While countries such as the UK and America have relied more upon so-called quantitative easing, the ECB, while also operating a quantitative easing program, has also relied heavily on direct liquidity injections. The hope is that this significant investment will improve investor and business confidence in the eurozone and eventually see the general economy start to recover.

Amid concerns that the ECB is looking to grab more regulatory power across Europe there are fears that individual funding elements will mushroom as the ECB demands more and more money from EU members. The more money that EU members inject into the ECB the more dependent they will become in the ECB in the future.

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