Germans concerned over Draghi liquidity offer Mario Draghi has run into Bundesbank resistance over easing access to European Central Bank offers of three-year liquidity for eurozone banks, highlighting German unease over the measures the ECB president has taken to turn the region's fortunes. The ECB's 23-strong governing council gave the go-ahead on Thursday for seven national central banks to expand the assets that can be used as collateral when obtaining liquidity. The measures could increase significantly the number of banks tapping a second offer of three year loans this month, and theoretically allow them to borrow an extra €200bn. In December, more than 500 banks borrowed a total of €489bn. However, Jens Weidmann, Bundesbank president, voiced concern about a lowering of credit standards and Mr Draghi admitted the council decision had not been unanimous. The Bundesbank's concern is significant because Mr Draghi has tried to repair the damage created by conflicts with sceptical German policymakers over eurozone crisis measures under Jean-Claude Trichet, his predecessor. The ECB's three-year longer term refinancing operations, launched late last year, have substantially eased funding problems faced by banks and boosted confidence in the stability of Europe's monetary union. The Bundesbank initially went along with the measures but appears to have become concerned. Mr Weidmann warned last week that "too generous" liquidity provision could create the wrong incentives for eurozone banks, storing up inflation risks for the future. Its objections on Thursday reflected worries about imbalances building in the eurozone financial system and the lack of incentives to banks to start lending to each other again. Mr Draghi argued that the ECB's actions have averted a serious credit crunch in the eurozone. He struck a cautiously upbeat tone on the eurozone economic outlook after the ECB council left its main policy rate unchanged on Thursday at the record low of 1 per cent. Mr Draghi dropped a previous warning of "substantial" downside risks to growth, talking simply of "downside risks" - a change seen by analysts as making interest rates cuts less likely in coming months. The ECB's spotting last month of "tentative signs of a stabilisation in economic activity at a low level," had been confirmed by subsequent data. The council "didn't discuss any prospective or current change in interest rates," Mr Draghi added. The rule changes unveiled on Thursday, temporarily allowing the broader use of bank loans, would boost by about €600bn the pool of assets that can be used as collateral in ECB operations. But the extra amount borrowed from the ECB would be significantly lower once "haircuts," reflecting the riskiness of assets, were applied. Mr Draghi said the riskiness of liquidity providing operations would rise - but steps had been taken to ensure that they were adequately managed and the measure would be reviewed after six months. As part of the deal, the national central banks will shoulder the additional risks involved in the broadening of the collateral pool - normally losses are distributed across the eurozone. Some eurozone officials have expressed private concern about the "Balkanisation," or disintegration, of monetary policy. But Mr Draghi argued that national central banks were better placed to judge the quality of individual loans. The measure would be of particular help to banks serving small and medium sized companies - and thus the real economy. One central bank operating the new scheme said it would effectively mean accepting loans with a BB- credit rating as collateral, where previously they would have accepted BBB-. The Banque de France said it would accept loans where there was a maximum default probability of 1 per cent over a short maturity. The Bank of Italy said it would only accept loans that had a probability of default of lower than 1 per cent. The total pool of ECB-eligible collateral available to eurozone banks is estimated at about €14tn - but is not evenly distributed among banks. Huw van Steenis, banking analyst at Morgan Stanley in London, said the ECB's help was deliberately targeted: "The countries which are enabling banks to borrow on their corporate loans are the ones which have seen the biggest impact of sovereign stress on bank funding."