Deposits at ECB Increase to Record 364 Billion Euros

Discussion in 'Economics' started by ASusilovic, Jun 9, 2010.

  1. June 9 (Bloomberg) -- Overnight deposits with the European Central Bank rose to a record as the sovereign debt crisis made banks wary of lending to each other.

    Banks lodged 364.6 billion euros ($436 billion) in the ECB’s overnight deposit facility at 0.25 percent, up from 362 billion euros yesterday, the Frankfurt-based central bank said in a market notice today. That’s the most since the start of the euro currency in 1999. Deposits have been close to or above 300 billion euros for the past nine sessions.

    Banks are parking cash with the ECB instead of lending it on amid concern that counterparties own too many bonds from Europe’s most indebted nations. While deposits exceed those during the post-Lehman Brothers crisis, the overall amount of money in circulation has also increased as the ECB has flooded money markets with cash since 2008.

    The cornerstone of the ECB’s strategy to help pull the euro region out of the worst recession since World War II has been to lend banks as much cash as they need against eligible collateral at its key rate of 1 percent, a record low.

    The sovereign crisis has pushed up longer-term money market rates across the board, forcing the ECB to start buying government bonds.

    The ECB said on May 31 that banks will have to write off more loans this year than in 2009 and their ability to sell bonds may be hampered as governments seek to finance fiscal deficits.

    I would like to see the list of banks sh..ting their pants and holding cash at 0.25 %. Then, I would send my secretaries to the post office donating them with this :


    :D :D
  2. That's likely to be in preparation for the big roll of the 440bn coming off. Not a big deal, IMHO.