FRANKFURT (MNI) – The European Central Bank Tuesday drained E60
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 tenth
consecutive weekly term deposit tender since the ECB announced in May
that it would buy bonds to shore up sovereign debt markets.
The drained amount matches the amount drained last week. The ECB
explained Monday that due to rounding, the drained amount was the same,
even though the bank actually purchased E302 million in additional
securities last week.
That was the lowest weekly total since the bond buying began in
May, and it lends support to the view of those who expect the program to
enter dormancy, if not be jettisoned, soon.
Eighty-eight banks placed bids totaling E97.169 billion today, or
1.6 times the desired absorption amount. This matches last week’s ratio.
The weighted average allotment rate for today’s operation was
0.56%, matching last week’s operation, the ECB said. The lowest rate was
0.40% and the highest rate accepted, or the marginal rate, was 0.64%.
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
ECB said Monday.
–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
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