FRANKFURT (MNI) – The European Central Bank on Tuesday drained
E72.0 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 and was E3 billion
above the drained amount from last week, given that the central bank
purchased E2.667 billion last week under the Securities Market Program,
after purchasing just under E2 billion in the previous week.
The total of new purchases last week was a five-month high and is
clearly a reaction to tensions in the sovereign debt market, especially
in the Eurozone’s periphery.
There were bids from 57 banks totaling E96.58730 billion at
Tuesday’s draining operation, the ECB said.
The weighted average allotment rate for the operation was 0.49%,
the lowest rate was 0.35%, and the highest rate accepted, or the
marginal rate, was 0.55%, the ECB 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 almost inevitable event of new bond purchases.
–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
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