Banks have the first of two opportunities to get the 3-year money this week, with allotment announced on Wednesday.
It is the ECB's latest and most dramatic attempt so far to help banks bolster their finances and a move it hopes will minimise the chances of banks responding to the current euro zone turmoil by slamming the brakes on lending.
The 3-year tender is expected to draw high demand. Traders polled by Reuters just hours before the ECB announces the results expected a total of 310 billion euros.
Fourteen Italian banks, including top lenders UniCredit and Intesa Sanpaolo, had listed a total of 38.4 billion euros of state-backed bonds to be used as collateral for the ECB new funds, Italy Bourse said.
Three-month Euribor rates, traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending, fell to 1.416 percent from 1.418 percent on the prospect of a flood of new cash.
Longer-term rates fell. Six-month rates ticked down to 1.666 percent from 1.667 percent while 12-month rates ticked down to 1.997 percent from 2.000 percent.
Shorter-term one-week rates -- most heavily influence by excess liquidity, which fell, but sits at a still hefty 293 billion euros according to Reuters calculations -- eased to 0.757 percent from 0.760 percent.
Overnight rates rose to 0.605 percent from 0.583 percent.
The recent intensification of the euro zone debt crisis has left a growing pack of banks virtually locked out of open funding markets and reliant on the ECB.
The ECB said on Monday risks to financial stability in the euro zone increased considerably in the second half of this year, largely due to contagion effects from the debt crisis and bank funding strains.
In response the ECB has already reinstated some of its most potent crisis-fighting tools. This month it stepped up its efforts with its 3-year cash injection plan, a move that came in tandem with changes to make it generally easier for banks to get financing from the ECB.
The money market and economists will be watching the results of the 3-year operation closely.
Banks cut their weekly intake of ECB to 169 billion euros, down from the previous amount of almost 300 billion euros, which had been the highest in 2-1/2 years. Emergency overnight borrowing also remained high on Wednesday at above 7 billion euros.