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ECB faces up to banks’ liquidity addiction

The European Central Bank has provided a liquidity lifeline to the continent’s financial system since the first tremors of the financial crisis in August 2007. But now it stands accused of propping up zombie banks, not just sound ones. How it reacts to that challenge by withdrawing its emergency liquidity provisions without precipitating another crisis will be central to the story of 2011, says Lucy Fitzgeorge-Parker.

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