ECB?seeks bids to sterilise bond buys

THE European Central Bank called for bids yesterday to drain €60.5bn (£50bn) from Eurozone money markets to offset recent bond purchases.

The operation will be a variable rate tender with a maximum payout of one per cent interest.

Banks are limited to just two bids in the operation and the deposits they park can be used as collateral to reborrow from the ECB in its lending operations. The ECB has already said it will repeat the sterilisation process next week. The ECB carries out the sterilisation operations to balance out the cash it injects into the financial system when it buys bonds.

Market participants had said the ECB was buying Irish government bonds, which have come under pressure amid new concerns about debt levels.