European Central Bank loans help banks reduce stress

LONDON: European Central Bank President Mario Draghi's $1.3 trillion of cheap loans and pledge to do whatever it takes to stand behind the euro helped push indicators of stress in the continent's money markets down by an unprecedented degree this year.

The difference between the euro interbank offered rate and overnight index swaps, a measure of European banks' reluctance to make unsecured loans to one another known as the Euribor-OIS spread, contracted a record 0.85 percentage point this year to 0.12%.

The Euribor-OIS spread narrowed from as much as 2.07% four years ago, and is now little more than twice its typical level before the financial crisis broke.