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 ninth
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 compares with E59 billion drained last week.
This week’s targeted total means that an additional E1 billion worth of
bonds were purchased and settled in the last week.
85 banks placed bids totaling E98.288 billion today, or 1.6 times
the ECB’s desired volume. This compares to a ratio of 1.5 last week.
The weighted average allotment rate for today’s operation was
0.56%, matching last week’s operation, the ECB said. The lowest rate was
0.31%. The highest rate accepted, or the marginal rate, was 0.65%.
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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