Use of the European Central Bank's overnight deposit facility increased slightly Monday versus Friday, while use of the marginal lending facility declined, but both figures remained in the close vicinity of the previous day's reading, ECB data showed Tuesday.
Banks deposited EUR464.186 billion with the ECB Monday, up from EUR454.356 billion Friday, the data showed. Banks borrowed EUR1.209 billion, down from EUR1.436 billion, the ECB said.
The volume of deposits is off record highs but remains elevated--a sign of the abundance of liquidity in the euro-zone banking sector.
Deposits may shoot up further after the ECB's second three-year loan operation, or LTRO, at the end of February. The ECB expects strong demand, especially now that it has eased collateral rules for its refinancing operations.
The initial reaction to a high number at the ECB's next three-year LTRO "might well lead" to a continuation and perhaps initial catalyst on the risk-on trade, said ING analysts in a note.
"However, a number far in excess of the minimum [expected] should be seen as an official banking sector announcement that systematic risk is far from over and inter-bank trust, a true pre-requisite to a true stabilization of markets, is as dubious as ever," ING's analysts added.
They also said that while demand for the EUR489 billion allocated in the December operation was strongly concentrated in peripheral banking systems, ING would expect "reputational considerations" to continue to prevent large northern European banks from tapping the facility.
No comments:
Post a Comment