The European Central Bank spent 1.704 billion euros last week on covered bonds under a new purchase program with which it hopes to foster lending to businesses and thereby support the euro zone economy.

The purchases of covered bonds - debt backed by pools of home or commercial properties - are a new front in the ECB's battle to revive the euro zone economy and keep deflation at bay. Inflation in the bloc is running at just 0.3 percent.

The ECB began buying the bonds last week as part of a stimulus package it hopes will ease lending conditions and generate positive spill-over effects to other markets.

In addition to the covered bond buys, the ECB has given banks the chance to borrow four-year loans and will start buying asset-backed securities (ABS) - or bundled loans - later this year. It has also cut its main interest rate to almost zero.

ECB Vice President Vitor Constancio said this month the stock of covered bonds eligible for purchase by the ECB amounted to about 600 billion euros. Around 400 billion euros of ABS qualify for purchase by the ECB under its new plan, he added.

If the ECB continues its covered bond purchases at the same rate as in the first week of the new program, it will not get anywhere near the 600-billion-euro mark.

By taking some of the private assets it is targeting off banks' balance sheets, the ECB hopes to entice banks to lend more freely again, which is crucial for the euro zone economy as it relies largely on bank funding.

Some 90 percent of the global market for covered bonds is based in Europe, especially in Denmark, Germany, Spain, France and Sweden.

The ECB has said its latest stimulus measures combined will have a "sizeable" impact on its balance sheet, which it aims to return towards levels last seen in early 2012. It stood around 3 trillion euros then.

The ECB's balance sheet stood at just above 2 trillion euros in mid-October.