ECB Drains E65.0Bn In 1-Week Term Deposit Tender, As Intended

FRANKFURT (MNI) – The European Central Bank Tuesday drained E65.0
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 and was up from the
E64 billion drained previously. On Monday, the central bank reported
that it had purchased 1.073 billion in sovereign debt on the secondary
market during the week ending November 12.

Sixty-one banks placed bids totaling E80.7604 billion, the ECB
said.

The weighted average allotment rate for today’s operation was
0.63%, the lowest rate was 0.45%, and the highest rate accepted, or the
marginal rate, was 0.73%, 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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