FRANKFURT (MNI) – The European Central Bank said Monday that it did
not purchase or settle any government bonds in the week ending Friday,
October 15.
This is the first week since the program began last May in which
the ECB has completely refrained from making bond purchases.
The ECB’s abstinence comes after it bought E9 million worth of
bonds in the previous week, ending October 8.
On Tuesday, the ECB will reabsorb E63.5 billion in cumulative
purchases of government bonds via a quick tender to collect one-week
term deposits, the central bank said.
The total is equivalent to the volume of bonds the ECB has
purchased and settled since the inception of the Securities Market
Program, the formal name of the bank’s bond-buying program, on May 9.
“As no SMP transactions were settled last week, it happens that the
rounded settled amount – and the intended amount for absorption
accordingly — remains unchanged at E63.5 billion” the ECB said.
The draining operation, to be conducted on Tuesday at 9:30 GMT,
will be in the form of a variable-rate tender with a maximum bid rate of
1.00%, the bank said.
The liquidity will be held at the bank for one week as a term
deposit. These fixed-term deposits can be used as collateral for the
Eurosystem’s credit operations, the ECB said. The central bank said it
intends to hold another liquidity-absorbing operation next week.
The fact that the ECB actually bought no bonds last week is
somewhat ironic, since the purchasing program recently became the focal
point of public disagreement among Governing Council members, a rare
phenomenon.
Council member Axel Weber called last week for the program to be
phased out permanently. ECB President Jean-Claude Trichet shot back in
an interview over the weekend, saying that Weber’s opinion was “not the
position of the Governing Council, [by] an overwhelming majority.”
–Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
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