The European Central Bank (ECB) said it will resume its covered-bond purchases starting in November and will offer banks two additional unlimited loans of 12 and 13-month as part of its measures to keep Europe liquid and avoid a new crisis.

The Bank's chairman Jean-Claude Trichet  said at a press conference today in Berlin that the central bank will spend €40 billion ($53 billion) on covered bonds, according to several market reports. The ECB also announced that it will hold interest rates 1.5 percent.

The ECB said it will also continue to lend banks as much money as they need in its regular refinancing operations at least until July 2012.  

Approximately 60 billion euros of covered bonds were purchased in the ECB's previous one-year program that expired in June last year. The program was also designed to make banks’ balance sheets more liquid and encourage lending during the latest financial crisis.


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