Oct 20, 7:10 AM EDT

Eurozone's monetary authority starts purchases of securities aimed at stimulating bank lending

Business Video

Latest News
Barclays sets aside $805 million over alleged rigging of foreign exchange markets

German airline Lufthansa lowers profit forecast for 2015 over global economic concerns

German unemployment dips again in October as labor market gains steam

Spain posts 5th consecutive quarterly GDP growth as economy shrugs off recession

Latest News
Economy-boosting steps taken by the world's central banks, at a glance

Regulators close small bank in Illinois; brings US bank failures to 16 in 2014

Dallas businessman Wyly, facing liability in SEC fraud case, files for bankruptcy protection

Buy AP Photo Reprints

FRANKFURT, Germany (AP) -- The European Central Bank has started buying securities called covered bonds as it launches its latest stimulus effort aimed at preventing the 18-country eurozone economy from sinking back into recession.

An ECB spokeswoman confirmed the purchases began Monday.

Covered bonds are investments backed by loans such as mortgages. They carry extra protections for investors, which sets them apart from other such asset-backed bonds made from bundled loans.

The ECB is buying them to encourage banks to make the underlying loans. The idea is to get more credit moving to businesses in a eurozone economy that didn't grow at all in the second quarter.

The ECB stimulus efforts also include offers of extra-cheap loans to banks, based on how much they are lending to companies.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.