Nor is the shift from direct lending to auction sure to work: for all the praise heaped upon the ECB, the spread between the ECB's repo rate and euro-denominated interbank rates is no less worrying than that in America or Britain.

ECONOMIST: A collaboration over the credit crisis

The hope is that by extending the maturity of central-bank money, broadening the range of collateral against which banks can borrow and shifting from direct lending to an auction, the central bankers will bring down spreads in the one- and three-month money markets.

ECONOMIST: A collaboration over the credit crisis

Last January, the Fed started lending through its term auction facility twice a month in order to flood the financial system with cash.

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Home-buyers have been offered tax breaks on their mortgages, developers are again bidding at auction and the banks are lending.

ECONOMIST: Tung constrained

All that said, the banks that regard themselves as strongest have a particular incentive to resist pressure from the Bank of England and the Treasury not to take too much of the money on offer in tomorrow's auction and in the so-called Funding for Lending scheme that will be launched next month.

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Italy held a successful auction of five-year government bonds Monday morning at a 6.29% yield, lending some ground beneath markets, which held onto its gains from late last week and opened flat.

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