FRANKFURT (MNI) – The European Central Bank Tuesday fell short of
its target in a one-week liquidity-absorbing operation intended to
sterilize the ECB’s purchases of Eurozone government bonds, draining
only E71.403 billion from the system compared with an intended E76.0
billion, the bank said.
One likely reason for the lower-than-expected interest in
depositing funds with the ECB for seven days is the fact that a
three-month LTRO will mature on Thursday, resulting in just over E71
billion leaving the system.
Forty-nine banks placed bids for today’s liquidity-draining op,
totaling E71.403 billion, the ECB said.
The weighted average allotment rate for today’s operation was
1.17%, the lowest rate was 1.0%, and the highest rate the ECB was
willing to pay, or the marginal rate, was 1.25%, the central bank
reported.
The drained liquidity takes the form of fixed-term deposits. These
can be used as collateral in the Eurosystem’s refinancing operations.
The central bank will hold another liquidity-absorbing operation next
week to reabsorb this week’s term deposits when they expire, as well as
any additional amounts that might be injected into the financial system
in the event of new bond purchases.
— Frankfurt bureau; +49-69-720 142; email: frankfurt@marketnews.com —
[TOPICS: MGX$$$,M$$FX$,M$X$$$,M$G$$$,M$$EC$]
