European Central Bank making bold moves

FRANKFURT, Germany, Aug. 18 (UPI) -- The decision by the European Central Bank to offer unlimited funds at a cost no higher than the going rate could trigger risky lending, it was reported.

The ECB is entering uncharted territory as its tries to steady the global financial system, The Wall Street Journal reported Saturday.

On Aug. 9, the European Central Bank told banks they could have as much money as they wanted at the bank's 4 percent base rate. It was a bold gamble for the ECB, which has been accused in the past of being too conservative, the Journal reported.

The news of unlimited lending panicked many investors who assumed the ECB had inside knowledge of a pending crisis, while others said the decision encouraged banks to keep making the risky kind of loans that helped spark the tight-cash crisis.

Now, some wonder whether the ECB will back off a plan to increase interest rates at its next meeting Sept. 6, a move complicated by the Federal Reserve’s decision Friday to cut the U.S. discount rate by half a point, the Journal reported.