FRANKFURT (MNI) – The European Central Bank on Tuesday drained
E72.5 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 E0.5 billion
above the drained amount from last week, given that the central bank
purchased E603 million last week under the Securities Market Program,
after purchasing E2.67 billion in the previous period.
The total of new purchases last week was the lowest reported since
October, during which time the ECB had only made a total of E9 million
in bond buys.
There were bids from 44 banks totaling E81.024 billion at Tuesday’s
draining operation, the ECB said.
The weighted average allotment rate for the operation was 0.42%,
the lowest rate was 0.32%, and the highest rate accepted, or the
marginal rate, was 0.6%, 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: +49-69-720 142; email: frankfurt@marketnews.com —
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