Interest rates in the futures market surged last month after banks repaid three-year funds for the first time. The rate on three-month Euribor futures expiring in December 2013 rose as high as 0.58 percent on Jan. 28, the most since July. It dropped to as low as 0.31 percent after today's data from 0.39 percent yesterday.

Banks that have returned funds so far include Spanish lenders Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, or BBVA, and CaixaBank. Belgian, Portuguese and German banks have also handed money back.

The ECB approved the temporary use of credit claims as collateral by seven euro-area member central banks ahead of the second three-year operation last year. That provided as much as 70 billion euros of additional funding for Italian banks alone, Fabrizio Saccomanni, director general of the Bank of Italy, said at the time.

The move allowed smaller banks in Ireland, Spain, France, Italy, Cyprus, Austria and Portugal with weaker collateral to tap ECB funds, von Gerich said. Those banks may not yet be in a position to take advantage of the improved environment in financial markets, he said, adding “many banks are still very reliant on ECB funding.”

The ECB still allows banks to borrow as much money as they want against eligible collateral for periods of one week, one month and three months.

Eoin Treacy's view The scrapping of the Eurozone's growth estimate this morning coupled with the fragility of the banking sector leaves the ECB with ample room to provide additional liquidity without the threat of stoking inflationary pressures. The soon to be launched rescue of Cyprus due to its exposure to the Greek financial market represents another instance where ECB liquidity will be called upon. For investors worried about the prospects of central bank tightening this bolsters the chances that Europe will not be the first region to curtail access to credit. (Also see yesterday's comments on the outlook for stock markets.)