The use of the European Central Bank's overnight deposit facility reached a new record high for the year Thursday, suggesting recent measures by central banks and policy makers still aren't enough to restore confidence in inter-bank lending markets. Banks deposited €346.99 billion ($453.38 billion) in the overnight deposit facility, up from €264.97 billion a day earlier and a previous high for the year of €346.36 billion, reached earlier this month. The high level reflects ongoing distrust in inter-bank lending markets, where banks prefer using the ECB facility as a safe haven for excess funds rather than lending them to other banks. The high deposit level also suggests markets aren't fully convinced that the ECB's massive long-term loan allotment is enough to fortify the currency bloc's banking sector. The central bank extended nearly half a trillion euros in long-term loans to euro-zone banks Wednesday, hoping to ease fears of a new credit crunch as banks struggle to borrow from markets. The turmoil has hit the French economy during harder than first thought forcing a revision of the country's third quarter growth figures down to 0.3pc from 0.4pc. Household disposable income, or the cash that consumers have to spend, "markedly decelerated", said France's Insee statistics body. Spanish producer-price inflation slowed for a second month in November, after the economy stalled. Prices of goods leaving factories, mines and refineries rose 6.3pc from a year earlier, after increasing 6.5pc in October, the National Statistics Institute in Madrid said. In Italy, consumer confidence fell in December to the lowest since January 1996 as households grew concerned about austerity measures and a probable recession. And Greece's unemployment rate has soared again - it rose to 17.7pc in the third quarter, from 16.3pc in the second, according to Hellenic Statistical Authority data. Meanwhile, Mr Juncker said he was determined to push ahead with the controversial Financial Transaction Tax (FTT), at the eurozone level if not across the G20 and EU. He added: "And if it's not a financial transaction tax, then another form of financial responsibility for the financial sector." Europe is suffering from a debt crisis marked by worries that heavily indebted governments such as Italy may be unable to pay off their bonds. That means trouble for banks because they typically hold government bonds. The large deposits come despite Wednesday's massive central bank credit operation, in which the ECB let banks borrow as much as they wanted for up to 3 years. As a result 523 banks took €489bn, the largest ECB loan operation in the 13-year history of the euro. The ECB has increased lending to banks to help them get through the crisis. Some are finding it impossible to raise money elsewhere, so the ECB steps in as lender of last resort, a typical role for central banks in times of turmoil....So, the banks deposited billions in order to borrow twice AS MUCH ??? to and from BCE ...what is this nonsense ???? The ECB further said banks borrowed €6.34 billion from the ECB's overnight lending facility, compared with €7.55 billion borrowed a day earlier. When markets are functioning properly, banks only use the facility to the tune of a few hundred million euros overnight.
Access Investments-Building Awareness - European Union-ROMANIA
Saturday, December 24, 2011
Yesss.....we are brushing the dust under the carpet ...see you after the holydays
The use of the European Central Bank's overnight deposit facility reached a new record high for the year Thursday, suggesting recent measures by central banks and policy makers still aren't enough to restore confidence in inter-bank lending markets. Banks deposited €346.99 billion ($453.38 billion) in the overnight deposit facility, up from €264.97 billion a day earlier and a previous high for the year of €346.36 billion, reached earlier this month. The high level reflects ongoing distrust in inter-bank lending markets, where banks prefer using the ECB facility as a safe haven for excess funds rather than lending them to other banks. The high deposit level also suggests markets aren't fully convinced that the ECB's massive long-term loan allotment is enough to fortify the currency bloc's banking sector. The central bank extended nearly half a trillion euros in long-term loans to euro-zone banks Wednesday, hoping to ease fears of a new credit crunch as banks struggle to borrow from markets. The turmoil has hit the French economy during harder than first thought forcing a revision of the country's third quarter growth figures down to 0.3pc from 0.4pc. Household disposable income, or the cash that consumers have to spend, "markedly decelerated", said France's Insee statistics body. Spanish producer-price inflation slowed for a second month in November, after the economy stalled. Prices of goods leaving factories, mines and refineries rose 6.3pc from a year earlier, after increasing 6.5pc in October, the National Statistics Institute in Madrid said. In Italy, consumer confidence fell in December to the lowest since January 1996 as households grew concerned about austerity measures and a probable recession. And Greece's unemployment rate has soared again - it rose to 17.7pc in the third quarter, from 16.3pc in the second, according to Hellenic Statistical Authority data. Meanwhile, Mr Juncker said he was determined to push ahead with the controversial Financial Transaction Tax (FTT), at the eurozone level if not across the G20 and EU. He added: "And if it's not a financial transaction tax, then another form of financial responsibility for the financial sector." Europe is suffering from a debt crisis marked by worries that heavily indebted governments such as Italy may be unable to pay off their bonds. That means trouble for banks because they typically hold government bonds. The large deposits come despite Wednesday's massive central bank credit operation, in which the ECB let banks borrow as much as they wanted for up to 3 years. As a result 523 banks took €489bn, the largest ECB loan operation in the 13-year history of the euro. The ECB has increased lending to banks to help them get through the crisis. Some are finding it impossible to raise money elsewhere, so the ECB steps in as lender of last resort, a typical role for central banks in times of turmoil....So, the banks deposited billions in order to borrow twice AS MUCH ??? to and from BCE ...what is this nonsense ???? The ECB further said banks borrowed €6.34 billion from the ECB's overnight lending facility, compared with €7.55 billion borrowed a day earlier. When markets are functioning properly, banks only use the facility to the tune of a few hundred million euros overnight.
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4 comments:
What is the point of all this?
"ECB's £489bn will 'buy valuable time' but is no eurozone debt bazooka"
How can there be any debt solution or "debt bazooka?"
I must be missing something "magical" about to happen at Christmas.
Is there no one left in politics with a "conscience?"
Surely some of them must be religious , standing in Church singing Carols ,then kneeling and praying ?
Are they all "self serving", with no thought of ordinary people and the consequences of their actions?
You see things are getting beyond money.[ just the numbers don't add up].
When is The UK going to "pull the rug" from under the EU.?
For all European people
"That's liability for another E500 billion transferred to European taxpayers..." Now that is an interesting assumption. But the situation is probably even more bizarre than that.
If you trace the detail of the legal obligation of Germany, France and the other central banks behind the ECB, then you may find that in the event of the ECB being wound up then each of these national central banks will be finding grounds to repudiate their liabilities. In short, the ECB is issuing funds with no ultimate taxpayer backing.
Take for example the German position should the ECB be wound up. They would claim that their Constitutional court, the Bundestag, and the Bundesbank had given no authorization for the issue of these ECB funds with plenty of advanced notice of this fact and therefore the German taxpayer was under no legal obligation to honour the liabilities of the ECB. In the case of Germany et al repudiating their responsibility for ECB liabilities then the loss will fall where it will. And that means that anyone selling assets of any form in exchange for Euros and still holding those Euros or outstanding debts in Euros will take the loss when the music stops playing for the ECB. The reality is that there is no final backer for the ECB and the Euros issued by the ECB. Therefore if a EMU area bank wants to buy your non-EMU area assets with freshly issued ECB Euros - think three times!
Indeed this may be the deliberately fraudulent way to refinance EMU area banks before the final collapse of the Euro - get the ECB to print billions of Euros and distribute them to EMU area banks. Then get those EMU area banks to buy non-EMU area assets from unsuspecting mugs. When the ECB collapses then EMU area banks hold good assets and the foreign banks / investors hold the valueless Euros. Germany and France may see it as a bit of EMU area revenge for the toxic US housing assets sold to them - nevertheless it is naked fraud.
Let the buyer be warned!
A perfect example of no matter how bad things get in the global economic landscape, "our cave is still better than they other guys' cave". Europe's debt and tensions in Korea causing people to run to the dollar. Although on the surface it would seem that we have reached the point of unsustainability, the rest of the world still views the U.S. as a "safe haven".
The news from Europe continues to be relentlessly negative. It undermines any bounce attempt, however short lived.
The sentiments continues to be bullish. All in all a weak market trying to hold its recent gains.
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