RSS feedecb
’
Monetary blanks in the Eurozone
We think the following chart from Nomura’s Richard Koo on Wednesday is something that every inflationista and goldbug should study closely:
What it expresses amazingly well is the degree to which 2008 compromised the transmission mechanism for central banks.
LTRO facts du jour
The average maturity of a euro of liquidity provided by the ECB on December 1 was 46 days. Today [March 5] it is 942 days, an increase of 20 times
– Lorcan Roche Kelly of TrendMacro, on the ‘time quality’ of €1.1tn LTRO funding
Counting E500 notes at the rate of one per second,
Big banks to EBA: just about done here?
Yeah, we knew the LTRO-inspired rally would make it easier for European banks to start closing the gap between their capital ratios and those required by the EBA – or at the very least, as in the case of Commerzbank,
LTRO names n’ numbers (so far) [updated]
Not all 800 banks who tapped the ECB’s second three-year liquidity op — obvs. But…
[DJ] Intesa Sanpaolo Took Up EUR24B Of ECB’s LTRO – CEO
*LLOYDS BANKING TAKES 11.4 BLN PNDS IN THREE-YEAR LOANS FROM ECB
*ALLIED IRISH SAID PARTICIPATED IN ECB THREE-YEAR MONEY ALLOTMENT
(Allied Irish didn’t divulge how much it tapped,
LTRO.2 €530bn [updated]
That’s €530bn with 800 bidders — 277 more than participated last time, when the uptake was €489bn.
For reference, here’s the first Ltro:
As a reminder, December’s sum was ‘only’ €193bn of new liquidity.
How deep are the ECB’s pockets?
The below is from the FT’s Money Supply blog that covers all things central banky.
The ECB’s exposure to peripheral sovereign debt and a host of other assets of dubious quality has sparked concerns about the central bank’s solvency.
An unexpected LTRO reaction?
That wasn’t quite our last pre-LTRO/Ltro/L-Troh post.
On Tuesday Marc Chandler, global head of currency strategy at Brown Brothers Harriman, ventured an interesting hypothesis on what the market’s response might be to the LTRO-II take-up,
Fitch on who’ll tap the LTRO
A nice visualisation from Fitch of which countries’ banks accounted for most net new liquidity provided by December’s first three-year LTRO, ahead of the second liquidity op this week:
Mostly the Spanish and Italians,
ECB (temporarily) suspends Greek collateral
We assume this is just while the PSI is underway and follows S&P’s selective default move overnight. From the ECB on Tuesday….
The Governing Council of the European Central Bank (ECB) has decided to temporarily suspend the eligibility of marketable debt instruments issued or fully guaranteed by the Hellenic Republic for use as collateral in Eurosystem monetary policy operations.
The “L-troh”, the credit crunch, and the carry trade
Yes, “L-troh”. So ubiquitous is the ECB’s three-year liquidity op getting that we’re turning the acronym into a word. Like Nato or Isda. So sue us!
With the second three-year Ltro on Wednesday, the release from the burden of the acronym has come just in time for another bout of guesswork on how ‘big’ it will be,
Entwining bailouts and eurozone central banks
Exhibit one, the Greek default.
The European Central Bank will not take losses on Greece. It will not even have to do anything tricky with ‘purchase prices’ etc under the latest bailout deal. The ECB simply hands over profits on the bonds that it makes over time (accrued coupons,
Diagram du jour: How the ECB transmission mechanism is broken
Courtesy of Nomura’s euro area economics and strategy team (click to enlarge):
And as Nomura explains, in normal times…
…the level of ECB liquidity support is minimal as banks are able to lend and borrow funds via the interbank money markets.
ECB seniority and dirty hands
First, do read Dan Davies’ bailout options post if you haven’t already. It’s like a Greek Kobayashi Maru. Except you have no hope of ending up like James T Kirk. We got to number 5.
But speaking of Greek debt situations where there are no good outcomes left…
For the ECB, a French (history) lesson
On French inflation during the 1920s, that is.
Central bankers continue to be oh-so-blasé about their ever-expanding balance sheets, swiping aside all those worries of triggering a surge in inflation.
The LTRO 2 outlier…
Courtesy of the European economics team at UBS…
We want to meet the respondent who said €3 trillion. Were they just larking around or where they going for a wild outlier on the book in the hope they might strike lucky and look like a genius.
On balkanisation and credit claims
We missed Willem Buiter’s comments on “additional credit claim” ECB collateral when they were published on Monday. But since it’s pretty strong stuff from the Citigroup economist…
(Might need a key.
Another piece of the LTRO puzzle
The point has been made before that rising deposits at the ECB do not, (repeat, not) indicate that banks are “hoarding liquidity”.
Here’s Guy Debelle, assistant governor at the Reserve Bank of Australia,
Bored of the eurozone crisis?
So too is the ECB, clearly.
Enjoy, or complain to your Euro MP.
c.c. Daily Mail news desk
Abstract:
At the 2010 FIFA World Cup in South Africa, many soccer matches were played during stock market trading hours,
LTRO credit claims, not so carry trade
Just as “free lunch” appears in a Bloomberg headline on the ECB’s three-year liquidity…
Here’s a pair of interesting analyst reactions to Friday’s details on eurozone central banks’ rules for accepting additional credit claims.
Those haircut-heavy credit claims [updated with more haircuts]
Update — apologies for a rather disorganised (and long) post… but we’ve finally gained information from all seven eurozone central banks who’ll accept additional credit claims under the ECB’s new rules…
Here be Draghi, on ECB collateral [updated]
Some interesting points about the ECB’s expansion of the collateral it will accept for funding at February’s three-year LTRO, plus a bit on its Greek bonds, from ECB President Mario Draghi at pixel time…
European repo has been contained!
From Icap’s latest repo weekly report:
See that? That’s Italian general collateral trading more-or-less in line with the Eonia OIS curve after a good few months of haywire behavior. What’s more,
Greece’s biggest holdout, dealt with? [updated]
Goodbye to one massive FT Alphaville bugbear, anyway? An interesting story from Stephen Fidler of the WSJ/DJ FX Trader:
The ECB has agreed to exchange the government bonds it purchased in the secondary market last year at a price below face value,
Global liquidity fail — the role of skewed incentives
Presenting, one of the best accounts of how the current crisis came about that we’ve read to date.
It comes courtesy of Benoît Cœuré, member of the executive board of the ECB, and should be required reading for every player in financial markets,
LTRO-ing, with Magnus
Intesa Sanpaolo’s chief executive says he’ll use ECB funds to buy Italian bonds…
BBVA sells the first senior unsecured bond to be issued by a Spanish bank since October… (like Intesa a few weeks ago.
Imagine no recoveries in bank senior debt
Seems kinda churlish to throw this out amidst the biggest bank bond rally since 2009. But…
We believe investors should assume a low (possibly 0%) recovery rate on most senior unsecured bank bonds
In practice,
Who tapped the LTRO, cont’d [updated]
Just one name today, but hopefully it rams home why banks are using the ECB’s three-year liquidity. From BBVA’s latest results:
Making use of the new lending facility provided by the European Central Bank (ECB),
Breaking up is hard to do — but here goes, anyway
From Jonathan Tepper, economist, chief editor of Variant Perception and co-author with John Mauldin of Endgame: The End of the Debt Supercyle…
A thirteen point guide to breaking up the euro.
Those countries that opt to remain in the euro will,