FRANKFURT (MNI) – The European Central Bank on Tuesday drained
E47.0 billion from the banking system in a one-week liquidity absorbing
operation intended to sterilize the ECB’s purchases of Eurozone
government bonds.
The amount drained matched the total volume of government bonds
purchased by the ECB and settled as of last Friday. It was the fifth
consecutive weekly term deposit tender since the ECB announced last
month that it would buy bonds to shore up sovereign debt markets.
The E47.0 billion figure is the cumulated total of bonds purchased
and settled since the ECB program began on May 10. It compares with
40.5 billion in the previous tender, meaning that an additional E6.5
billion worth of bonds were purchased and settled in the last week.
66 banks placed bids totaling E71.078 billion, or 1.5 times more
than the actual amount accepted by the ECB. The previous week’s
operation was over-subscribed by 1.9 times — with E75.627 billion worth
of bids and E40.5 billion accepted.
Both of those figures are down sharply from the first term tender
operation on May 18, when there were over E162 billion worth of bids for
a draining operation totaling E16.5 billion.
The weighted average allotment rate for today’s operation was 0.28%
as compared to 0.31% in last week’s operation, the ECB said. The lowest
rate was 0.26% and the highest rate accepted was 0.95%.
The drained liquidity takes the form of fixed-term deposits. These
can be used as collateral in the Eurosystem’s refinancing operations.
There will be another liquidity draining operation next week, the
bank said Monday.
–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
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