ECB doubles its capital base to combat risk of market volatility

THE European Central Bank (ECB) will almost double its capital to cope with increased credit risk and market volatility, it said yesterday.

The bank said it would raise its subscribed capital base from €5.76bn (£4.87bn) to €10.76bn by 2012, the first increase of its kind in the 12-year history of the central bank.

The news came as European Union (EU) leaders gathered in Brussels for a summit to discuss ways to avoid market contagion engulfing more high-deficit member states.

European Commission president Jose Manuel Barroso told EU leaders the rolling debt crisis posed a systemic threat to the single currency requiring a comprehensive response.

The central bank has bought around €72bn in Eurozone government bonds since May.