Central Banks

Tuesday, July 10, 2012 - 07:04

ECB Drains E211.5 Bln In 1-Week Term Deposit Tender As Planned

FRANKFURT (MNI) - The European Central Bank Tuesday drained E211.5 billion from the banking system in a seven-day liquidity-absorbing operation intended to sterilize the ECB's purchases of Eurozone government bonds.

The amount drained matched the total accumulated volume of government bonds purchased and settled by the ECB since the start of its bond buying program in May 2010, and taking into account the effect of the quarterly amortisation exercise.

Ninety five banks placed bids totaling E424.8095 billion, the ECB said. The weighted average allotment rate for the operation was 0.02%; the lowest rate was 0.0%, and the highest rate accepted, or the marginal rate, was 0.03%, the ECB reported.

The drained liquidity takes the form of fixed-term deposits. These can be used as collateral in the Eurosystem's refinancing operations. The central bank will hold another liquidity-absorbing operation next week to reabsorb this week's term deposits when they expire, as well as any additional amounts that might be injected into the financial system in the event of new bond purchases.

-- Frankfurt bureau: +49 69 720 142; email:frankfurt@marketnews.com --

[TOPICS: M$$CR$,M$X$$$,M$XDS$,MN$MM$,M$$EC$]

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