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Briefing
The Impact of ECB Easing
Critical Issues
Background:
Starting in June, the European Central Bank (ECB) extended the maturity of unlimited loans at a low 1% interest rate to 12 months. The first refinancing (refi) operation under these new terms garnered high demand in June, allotting 442 billion euros among 1,121 bidders - the largest injection since the 349 billion euros allotted in December 2007. However, nearly 180 billion euros were merely money borrowed through the ECB's shorter-term refinancing operations. The next one-year tender will occur end-September. The one-year tender may satisfy banks' demand for longer-term funding, but it remains to be seen whether banks will pass on the liquidity to borrowers.
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Associated Readings
Analysis
BNP Paribas
Jun 25, 2009
ECB: Excess Liquidity for a While | EUR: Curve Back to Highs | Capital Flows and JPY
Analysis
Merrill Lynch - Bank of America
Jun 24, 2009
FOMC: Repeat performance | ECB: new dose of cheap financing for banking sector
Opinions
Financial Times
Jun 24, 2009
Lex: European Central Bank’s fundfest
News
Wall Street Journal
Jun 24, 2009
ECB Allots Record EUR442.241B In 12-Month Refi Operation
Analysis
Nomura Securities
Jun 22, 2009
Markets underestimating Fed’s options on QE | ECB’s 1-year repo may extend steepening bias
Analysis
Natixis
Jun 03, 2009
Why should the ECB be criticised?
Analysis
Alliance Bernstein
Feb 02, 2009
ECB Injections Boost Money Market Liquidity but Not Lending
News
ECB
May 07, 2009
Longer-term refinancing operations with a maturity of one year
News
ECB
May 07, 2009
European Investment Bank (EIB) becomes an eligible counterparty in the Eurosystem’s monetary policy operations
Analysis
Fitch Ratings (free registration)
May 07, 2008
The Role of the ECB: Impact of Increased Liquidity on European Financial Markets and Banks
Analysis
ZEW
2007
What Explains the Spread Between the Euro Overnight Rate and the ECB’s Policy Rate?
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