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21 December 2011 Last updated at 11:33 GMT
Eurozone banks have rushed to take out cheap three-year loans offered by the
European Central Bank, borrowing 489bn euros ($643bn; 375bn).
The central bank had hoped to lend up to 450bn euros to stop another credit
crunch crippling the banking system.
When the plan was announced, French President Nicholas Sarkozy said banks could
use the money to invest in eurozone sovereign debt.
However, analysts were uncertain if banks will use the money in this way.
"The very heavy take-up of the ECB's three-year long-term refinancing operation
(LTRO) provides some encouragement that banks' liquidity needs are being amply
met," said Jonathon Loynes, Chief European Economist at Capital Economics.
"But while this might help to address recent signs of renewed tensions in
credit markets and support bank lending, we remain sceptical of the idea that
the operation will ease the sovereign debt crisis too as banks use the funds to
purchase large volumes of peripheral government bonds."
This was the European Central Bank's first offer of three-year loans and
although the offer was seen as a success, its impact on the eurozone economy is
still unsure.
"This is good. It's a positive number, at the top end of expectations. You have
to regard it as a positive result. This is at least a solid 240bn-euro increase
for banks. But it is still short of covering all of the banks' financing for
next year," said James Nixon at Societe Generale.
Some suggest the money will be used to boost bank balance sheets, especially
since the ECB lowered its collateral requirements when it announced the loans,
enabling weaker banks to apply for the funds.
"A cash for trash mechanism allowing banks to access cheap funds and buy up
more sovereign debt - or more likely just shore up their own finances," said
Justin Urquhart Stewart of Seven Investment Management.
Carsten Brzeski, economist at ING, said: "The good news is that banks won't
have to worry about liquidity for three years and that it has already pushed
down government yields as banks are buying them to use as collateral.
"However, whether the ECB's hopes that the money will filter through to the
real economy will be fulfilled remains to be seen."
There are hopes that the banks taking the loans from the ECB at low interest
rates will then buy sovereign bonds from countries such as Italy and Spain
which offer a much higher yield, dubbed Sarkozy trade after the French
president's encouragement for banks to do this.