ECB Drains E61 Bln In 1-Week Term Deposit Tender, As Intended

FRANKFURT (MNI) – The European Central Bank Tuesday drained E61
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.

The drained amount was equal to the sterilized amount last week as
the central bank rounds to the nearest half billion and had purchased
only another E237 million worth of new securities last week.

Sixty banks placed bids totaling E98.6468 billion, the ECB said.

The weighted average allotment rate for today’s operation was
0.34%, the ECB said. The lowest rate was 0.27% and the highest rate
accepted, or the marginal rate, was 0.37%.

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: +49-69-720 142; email: frankfurt@marketnews.com —

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