ECB Overnight Deposits Reach Record After Three-Year Loans
(Updates with economist’s comment in fourth paragraph. For more on Europe’s debt crisis, EXT4 <GO>.)
Dec. 27 (Bloomberg) -- The European Central Bank said financial institutions’ overnight deposits with it rose to a record after it awarded them three-year loans.
Euro-area banks parked 411.8 billion euros ($538.4 billion) with the Frankfurt-based ECB yesterday, the most recorded since the euro’s introduction in 1999 and up from 346.9 billion euros a day earlier. The previous record was 384.3 billion euros on June 11, 2010.
The ECB last week lent 523 banks a record 489 billion euros for three years in its latest attempt to keep credit flowing to the 17-nation euro economy during the sovereign debt crisis. It lent the money at its benchmark rate of 1 percent. Banks are depositing excess cash back with the ECB at the overnight rate of 0.25 percent, incurring a loss rather than lending it at a better rate elsewhere.
“It is way too early to declare the ECB loans a success or failure,” said Aline Schuiling, a senior economist at ABN Amro NV in Amsterdam. “It’s the end of the year, markets are very quiet and a lot of institutions are still closed. Never draw any fundamental conclusions in the final week of the year.”
The jump in overnight deposits was “to be expected, as there is simply more money sloshing around the system,” said Christoph Rieger, head of interest rate strategy at Commerzbank AG in Frankfurt.
Nobel-prize winning economist Robert Mundell said in a Bloomberg Television interview broadcast today that the ECB’s three-year loans are a “blockbuster event” that will “avert, at least for the time being, any kind of banking crisis.”
Unlike its counterparts in the U.S. and the U.K., the ECB has resisted calls to step up government bond purchases to fight the debt crisis, opting instead to grease the banking system with unlimited liquidity in the hope financial institutions will lend the money on to companies and households.
cash loans over night - News
Banks are depositing excess cash back with the ECB at the overnight rate of 0.25 percent, incurring a loss rather than lending it at a better rate elsewhere. “It is way too early to declare the ECB loans a success or failure,” said Aline Schuiling,
OAO Mechel (MTL) and OAO Gazprom (OGZPY) fell in New York on concern the surge in the European Central Bank's balance sheet shows a lack of capacity for new loans, dimming the outlook for European growth and Russia's commodity exports.
Overnight snowfall with almost no winds left four to five inches of the fluffy stuff. What was 2011 like in Belle Fourche and Butte County? In spite of floods and significant cuts in state aid for schools, in general it held a good agricultural economy
It's far from clear whether investors are willing to loan such amounts. On Thursday, Italy sold €7 billion in bonds, less than the full amount it had targeted. Investors demanded a yield of nearly 7% on 10-year lending, a painfully high rate.
This is a new one, and it just may spice up an intense NFC East rivalry. “This was a simple transaction with a loan agreement and promissory note reviewed by Mr. Bryant's advisors and signed by Mr. Bryant,” ECF said in a statement to the Herald.
The Ease And Convenience Of Overnight Payday Loans
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