The European Central Bank pumped €70 billion into money markets today as demand from banks topped the 100 billion mark amid signs interbank lending had frozen.
It was more than double the amount it allotted yesterday and effectively adds €40 billion to the funds it has now shovelled into money markets since they were shaken by the collapse of Lehman Brothers and the sale of Merrill Lynch to Bank of America.
Demand for the overnight variable rate funding rose to €102.48 billion. The ECB said that the money was lent at an average interest rate of 4.40 per cent with 56 banks taking part in the auction.
The ECB said yesterday it stood "ready to contribute to orderly conditions in the euro money market", shortly before pumping €30 billion into the system, although funding hungry banks would have sucked up more than three times that amount.