ECB would consider negative rates in extreme situation

The European Central Bank would only take its key deposit rate -- currently at zero percent -- into negative territory in an extreme situation, its vice president Vitor Constancio said on Wednesday. Earlier this month, the ECB pared back its central "refi" refinancing rate by a quarter of a percentage point to a new all-time low of 0.25 percent. And although ECB chief Mario Draghi said the central bank was technically ready to introduce negative interest rates on its deposit facility, it left that rate unchanged at zero percent. Speaking to news conference on the publication of the ECB's Financial Stability Review, said "we have announced many months ago that from a pure technical point of view we are ready to do it. "But certainly no decision about that because it is certainly open to measures that are certainly unprecedented," he said. Constancio noted that negative interest rates had been "tried briefly in Sweden and in Denmark." However, it was "different nevertheless to consider this for big economy like the euro area. Only in extreme situations that measure could be considered," he said. The ECB's number two said that the liquidity situation of European banks "is now much better than sometimes ago and much better than what it was in late 2011." At the end of 2011 and the beginning of 2012, the ECB pumped more than 1.0 trillion euros ($1.3 trillion) into the financial system via three-year loans to avert a looming credit crunch