So farewell, 12-month LTRO

All hail the last of the ECB’s 12-month repo tenders, in which the central bank attempts to inject liquidity into the Eurosystem.

The market waited with bated breath as Europe’s banks submitted their bids this Wednesday morning. How much would they need? The consensus forecast was for around €100bn — more than the €75bn requested in the September 12-month operation — but there’s been some disagreement.

The ECB has switched to a floating rate for the last of its one-year Long Term Refinancing Operations, rather than the fixed rates of the past — something which may end up limiting demand for the final LTRO.

Either way, the last one-year repo leaves lots of questions. For instance, if banks ask for lots of money is that indicative of banks still being reliant on ECB funding or simply a last-minute opportunistic spree for liquidity? If they don’t ask for a lot, is that indicative of an easing in banks’ need for cash or a shift in emphasis from short-term liquidity to longer-term refinancing?

Those are things to ponder, then, as we present the allotment results of the last 12-month LTRO:


So that’s €96.9bn worth of allocated bids then — just about as expected.

Related links:
ECB winds down liquidity support, indexes last 1-Yr –
ECB liquidity monster back in its cage, for now – FT Alphaville
How do you say vicious circle in Greece? – FT Alphaville
The ECB ‘liquidity monster’ – FT Alphaville

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