Banks' use Friday of the European Central Bank's overnight deposit facility fell slightly from Thursday but remained elevated, reflecting the huge amount of excess liquidity in the banking system after the ECB's longest-ever loan offer and the approaching end of the reserve period.
Banks deposited EUR797.953 billion with the ECB Friday, the central bank said Monday, down from Thursday's EUR800.573 billion.
The amount banks deposit overnight at the ECB surged higher after the central bank offered its first-ever three-year loan to banks in December. Levels reached fresh records after the ECB's second offer of the same facility in February.
Overnight deposits reached an all-time record of EUR827.534 billion a week ago after banks with operations in the euro zone tapped the ECB at the end of February for EUR529.5 billion against eligible collateral, bringing the total disbursement amount in three-year loans to a massive EUR1.019 trillion.
The ECB's balance sheet has expanded at a rapid rate as a result of its liquidity-boosting measures, reaching a record EUR3.023 trillion after the second longer-term refinancing operation.
Also boosting the amount of overnight deposits is the approaching end of the reserve period, during which banks are required to meet certain reserve requirements. Banks typically aim to meet the ECB's requirements early in each reserve period, reducing the level of excess liquidity during that time but increasing it as the end of the period nears. The current reserve period will end Tuesday.
Banks borrowed, meanwhile, EUR632 million from the ECB Friday, up slightly from EUR575 million Thursday.
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