ECB takes record €455bn in overnight cash deposits
Published 07/01/2012 | 05:00
The European Central Bank took a record amount of overnight deposits yesterday as the region's financial institutions entrusted funds amassed from emergency lending operations.
Euro-area banks parked €455.3bn with the Frankfurt-based ECB, the most since the euro's introduction in 1999 and up from €443.7bn reported on Thursday. Financial institutions borrowed €1.9bn at the central bank's marginal lending facility.
The ECB last month loaned 523 banks a record €489bn for three years to keep credit flowing to the 17-nation euro economy during the sovereign debt crisis. It loaned the money at its benchmark rate of 1pc. The surge in deposits suggests banks are placing excess cash back with the ECB at the overnight rate of 0.25pc, incurring a loss rather than lending it for more elsewhere.
"This was to be expected," said Nick Matthews, a senior economist at Royal Bank of Scotland in London. "The banks have large amounts of cash after refinancing operations, which they are happy to redeposit with the ECB. Expect the deposit facility usage to increase over the coming days." (Bloomberg)