Because banks were concerned about both the amount of liquidity they could obtain and the length of time for which they could hold on to the liquidity, in August 2007 the ECB provided liquidity at long time horizons as a way to insure banks against future liquidity shortfalls. This action helped increase public confidence that banks would be able to meet their obligations.
It is important to persist with and complete the process of fiscal consolidation, to reduce the ratio of debt to GDP, eliminate Government arrears and restore Government’s international credit worthiness.