Two reasons. First, the money supply shrinks by EUR 137 bln, so monetary conditions are a smidge tighter. The second, and more obvious, reason is that it shows confidence amongst the beleaguered European banking sector to begin standing on its own two feet. The safety net is still pretty high, with banks still borrowing over EUR 850 bln from the ECB under long-term contracts.
Basically it is one more sign that the worst has passed in the euro zone, a process that has been unfolding since late July when Draghi uttered the phrase that he will “do what it takes” to preserve the euro.
