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Economic Research

ECB Exit Strategy and Counterparty Risk

By end-September 2010, about €225 billion in three-, six- and 12-month longer-term refinancing operations came to maturity. Eurozone banks had the option to roll the maturing loans over into new three-month and six-day loans at a 1% fixed rate and full allotment. Banks chose only to roll over about €145 billion and repay the rest, thus significantly reducing the amount of excess reserves deposited at the ECB. Indeed, according to the latest available data, the amount of excess reserves declined to about €30 billion in[...]

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