ECB's LTRO plan flops as banks cut lending

The European Central Bank (ECB) said loans to the real economy fell in February, scotching claims that radical long-term refinancing operation (LTRO) would stem the crisis. Open Europe's Raoul Ruparel said: "The LTRO has succeeded in avoiding a severe funding crunch...[But] it does not tackle the underlying lending risks which the banks are still keen to avoid, particularly with the looming recession in Europe." As Spain faces a general strike on Thursday, economists called for the eurozone to use its bail-out funds to support the country's banks. Finance ministers are under pressure to boost Europe's "firewalls" in Copenhagan on Friday. But Jens Weidmann, Bundesbank president, warned that "just like the 'Tower of Babel' the 'Wall of Money' will never reach heaven". Italy's premier Mario Monti warned against blaming sinner states: "It was in fact Germany and France that were loose concerning the public deficits and debts," he said. "If the father and mother of the eurozone are violating the rules, you could not expect...[others] to be compliant."