FRANKFURT (MNI) – Financial market fragmentation will be the main
criterion the European Central Bank looks at when deciding the extent it
may need to intervene in government bond markets, ECB President Mario
Draghi said on Thursday.
“Our greatest concern is financial market fragmentation rather than
assessing exactly the figure,” Draghi said at the ECB’s monthly press
conference.
The symptoms of fragmentation across the Eurozone include the share
of cross-border lending, which has declined from 60% to 40% since
mid-2011, and that the level of non-domestic interbank deposits had
fallen to its lowest level since 2008 in several countries.
Increased dependence on ECB funding by banks in some countries “is
a further illustration of this segmentation,” he said.
Draghi also said that the ECB had observed an increased use of
domestic collateral by banks seeking loans. “The share of cross-border
use of collateral stands at about 20% today compared to 50% in 2006,” he
said.
“This is what we have to overcome, what we have to repair, what we
have to change,” he explained.
–Brussels newsroom: +324-9522-8374; pkoh@marketnews.com
[TOPICS: M$$CR$,M$X$$$,M$$EC$,MT$$$$,MGX$$$]
