Merler, S. (2014) “Shrinking times – ECB excess liquidity falls below €100 billion”, Bruegel Think Tank, 24 Απριλίου
Over the last 5 years, the Eurozone financial system has been flooded with liquidity, due to the ECB’s very special response to the very special bank-sovereign euro crisis.
In 2008, faced with an almost frozen interbank market, the ECB changed the way it allocates the Central Bank’s funds, introducing a policy of full allotment. As a result, the amount of liquidity provided to banks in the euro area was no longer determined by the ECB’s assessment of the banking system’s overall liquidity needs, but by banks’ own assessment of their individual liquidity needs. Supply started to be anchored 1:1 to demand and consequently taken out of the control of the central bank.
Then, in December 2011 and February 2012, the ECB conducted two Very Long-Term Refinancing Operations (VLTROs) with maturity of three years, under which banks borrowed as much as 1 trillion of very cheap and long-term liquidity. Additional 200bn were borrowed from other facilities, for a total outstanding liquidity of 1.2tr. Therefore, the balance sheet of the ECB more than doubled with respect to its pre-crisis level and the average maturity of the asset side lengthened. At the peak, in summer 2012, lending to banks amounted to 41% of all ECB’s assets, and 86% of it had maturity of three years (Figure 1).
Σχετικές αναρτήσεις:
- Frankel, J. (2014) “The ECB Should Do QE, Mario? Buy US Bonds, Not Eurobonds“, VoxEU Organisation Opinion Article, 24 Μαρτίου.
- Visco, I. (2013) “The aftermath of the crisis: Regulation, supervision and the role of central banks“, Centre for Economic Policy Research, Policy Insight No.68, Δεκέμβριος.
- Wren-Lewis, S. (2013) “Central Banks and Financial Stability“, Social Europe Journal, 18 Νοεμβρίου.