Relief at low ECB take-up
FEARS over the health of the Eurozone financial system were eased yesterday after the European Central Bank (ECB) reported much lower demand than expected for its three-month liquidity to replace €442bn (£361bn) in 12-month loans that expire today.
The auction, seen as a test of the sector’s health, temporarily eased concerns about bank finances which have rocked stock markets and weighed on the euro this week. Only 171 banks borrowed a total of €131.9bn in three-month liquidity – compared with forecasts that demand might exceed €300bn.
“It’s definitely a good sign and means there is still some interbank lending occurring within the European money market, and that it’s not just a vertical relationship between banks and the ECB,” said Gilles Moec, economist at Deutsche Bank