ECB governing council member Axel Weber said yesterday he expects the 12-month loans to “lead to a further narrowing of spreads” on longer-term market interest rates. Demand for shorter-term ECB loans may wane as a result or the new auction, he said.

The ECB announced in May it would lend an unlimited amount to banks for a full year for the first time at a record low rate of 1.0%, a move Goldman Sachs economist Erik Nielsen called monetary "easing by stealth."

The ECB has announced plans to purchase €60 billion worth of highly-secured covered but has resisted the so-called quantitative easing practiced by the US Federal Reserve and Bank of England -- essentially printing money to buy government and private debt to boost economies.

The previous ECB liquidity one-day record was €348.6 billion ($485 billion) set in mid-December 2007.