A total of 848 banks requested the funds, the first to be lent at the ECB's new benchmark rate of 3.25 per cent following a half percentage point interest rate cut on Thursday.
The ECB satisfied all requests for one-week loans, and would disburse on Wednesday a total of 334.413 billion euros, it said in a statement.
It had estimated that banks needed 222.5 billion euros for the week to underpin lending operations however, and the sharply higher amount indicated that banks were maintaining strong cash balances amid uncertainty generated by the international banking crisis.
'Banks are safeguarding their balance sheets to such an extent that they are now very reluctant to lend just when households and enterprises need credit to tidy them over some rough times,' Bank of America senior economist Holger Schmieding noted.
The situation appears to be creating some frustration at the ECB, and its president Jean-Claude Trichet has called on commercial banks to assume their responsibilities as purveyors of credit to the wider economy.
'It's not a normal functioning, clearly that you have a lot of supply of liquidity which at the end of the day is in our deposit window,' Mr Trichet acknowledged after the ECB announced its interest rate cuts.
Earlier on Tuesday, the ECB said that more than 209 billion euros were parked in its overnight deposit facility which offers a rate of 3.25 per cent, well below the going interbank market rate of 4.15 per cent.
That was a clear sign banks would rather lend money to the ECB, even at a lower rate of return, than to other banks amid prevailing market mistrust.
The ECB also said on Tuesday that it had identified a large amount of excess cash in eurozone money markets and would seek to mop it up with what it calls a fine-tuning operation.
The ECB's forecasts 'show that a large positive liquidity imbalance is expected' on the last day of period during which commercial banks must maintain minimum reserves.
The central bank would thus launch a call for the surplus to be deposited with it at variable rates of no more than 3.75 per cent. It said it would take in all the excess cash that banks wished to turn in.
Central banks have injected massive amounts of cash into interbank markets to encourage commercial banks to keep extending the credit on which business depends.
When it identifies a surplus, it withdraws cash to prevent an excessive supply from fuelling inflation.
Money markets determine the availability of credit for vast numbers of people around the globe, from managers trying to fund their businesses to families and students seeking mortgages and personal loans. -- AFP