The European Central Bank's 489 billion euros injection of ultra-long-term funds has seen the amount of excess liquidity in the banking system balloon to record levels and is putting heavy downward pressure on the rates banks charge each other in open markets. With banks awash with long-term funds, they took 116 billion euros in one-week funds at an ECB refinancing operation on Tuesday, slightly less than the 120 billion forecast in a Reuters poll and 16 billion less than the previous week. 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 1.125 percent from 1.131 percent, the lowest since the beginning of March last year. Longer-term rates also dropped. Six-month rates fell to 1.418 percent from 1.425 percent, while 12-month rates dropped to 1.754 percent from 1.762 percent. One-week rates - most heavily influenced by excess liquidity - fell to 0.401 percent from 0.404 percent. Overnight rates inched up on Monday to 0.385 percent from 0.379 percent the previous day. While it is still not clear whether the money from last month's 3-year loan operation was filtering through to companies and consumers, ECB President Mario Draghi said on Friday the move had avoided "a major, major credit crunch". Data showed on Friday that loans to euro zone companies fell at the fastest pace on record in December. This was mainly before the ECB's 3-year loans took effect. The ECB will offer another round of 3-year loans on Feb. 29. Draghi and others have said they again expect "substantial demand" meaning market rates are expected to come under renewed downward pressure in the coming months. Some economists and money market experts also believe the bank may hold at least one more 3-year operation after that. Interbank money markets, often the source of lending to the wider economy, remain dysfunctional as a result of the ongoing euro zone debt crisis. While short-term lending has improved in recent weeks, money market traders say banks remain reluctant to lend to peers for longer than a month. With high amounts of excess liquidity in the system, banks are currently depositing much of the extra cash back at the ECB. Overnight deposits at the ECB hit a record high of 528 billion euros at the peak of the ECB's last reserves period and currently stand at a still-hefty 479 billion euros. Short-term market rates are well below the main policy rate due to the excess cash, and the overnight deposit rate at 0.25 percent serves as a floor for money markets. Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 1000 GMT.