Eurozone crisis - ECB action today

The European Central Bank is expected to add further liquidity to the markets today, in an operation designed to offer cheap funding to banks that will then filter down to the SME''s that need it, to power the economic recovery across Europe.

The strategy, known as LTRO, or Long Term Refinancing operation, will enable European banks that ask for it to receive three year money at very low rates that eases any liquidity problems they might have, and also drives down the rates at which Eurozone countries can borrow in the open markets and underpins equity markets to some degree.

The exact amount to be offered at 1%, is expected to be in the region of Euro 350 billion, the announcement due at 10.15 UK time, though estimates vary from Euro 250 billion to Euro 700 billion, the higher the better as far as markets are concerned at the moment.

Whether this translates into cheaper funding for the average SME remains to be seen.