ECB Drains E63.5 Bn In 1-Wk Term Deposit Tender, As Intended

FRANKFURT (MNI) – The European Central Bank Tuesday drained E63.5
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 volume of government bonds
purchased by the ECB and settled as of last Friday, as the central bank
rounds to the nearest half billion and had purchased E1.384 billion
worth of new securities last week.

Seventy-seven banks placed bids totaling E114.1837 billion, the ECB
said.

The weighted average allotment rate for today’s operation was
0.42%, the lowest rate was 0.31%, and the highest rate accepted, or the
marginal rate, was 0.5%, the ECB reported.

The drained liquidity takes the form of fixed-term deposits, which
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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