FRANKFURT (MNI) – The European Central Bank Tuesday drained E110.5
billion from the banking system in a one-week liquidity-absorbing
operation intended to sterilize the ECB’s purchases of Eurozone
government bonds.
The amount drained matched the total accumlated volume of
government bonds purchased and settled by the ECB since the start of its
bond buying program in May.
91 banks placed bids totaling E132.87 billion, the ECB said. The
weighted average allotment rate for today’s operation was 1.03%, the
lowest rate was 0.84%, and the highest rate accepted, or the marginal
rate, was 1.50%, the ECB reported.
The drained liquidity takes the form of fixed-term deposits. These
can be used as collateral in the Eurosystem’s refinancing operations.
The central bank will hold another liquidity-absorbing operation next
week to reabsorb this week’s term deposits when they expire, as well as
any additional amounts that might be injected into the financial system
in the event of new bond purchases.
— Frankfurt bureau; +49-69-720 142; email:frankfurt@marketnews.com —
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