FRANKFURT (MNI) – The European Central Bank Tuesday drained E51
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 volume of government bonds
purchased by the ECB and settled as of last Friday. It was the sixth
consecutive weekly term deposit tender since the ECB announced last
month that it would buy bonds to shore up sovereign debt markets.
The drained amount compares with E47.0 billion in the previous
tender, meaning that an additional E4 billion worth of bonds were
purchased and settled in the last week.
67 banks placed bids totaling E71.55990 billion, or 1.4 times more
than the actual amount accepted by the ECB. The previous week’s
operation was over-subscribed by 1.5 times — with E71.078 billion worth
of bids and E47.0 billion accepted.
The weighted average allotment rate for today’s operation was 0.31%
as compared to 0.28% in last week’s operation, the ECB said. The lowest
rate was 0.25% and the highest rate accepted, or the marginal rate, was
0.40%.
The drained liquidity takes the form of fixed-term deposits. These
can be used as collateral in the Eurosystem’s refinancing operations.
There will be another liquidity draining operation next week, the
ECB said Monday.
–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
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