Eurozone banks increased sharply their use of mortgage-backed debt and similar structured bonds last year in order to raise money from the European Central Bank, helping to avoid liquidity problems in financial -markets.

The volume of asset-backed securities pledged as collateral in ECB market operations to provide funding to banks reached €215bn by the end of last September, the bank said in data released yesterday. This took the proportion of such debt being used up to 17 per cent of all collateral pledged, up from 12 per cent in 2006.