Thursday, December 22, 2011
European Central Bank Buys Itself a Quiet Holiday Respite
Wall Street Journal
December 22, 2011
European bankers are taking no chances. After having had their summer holidays ruined by the financial crisis, they are determined not to let their Christmas breaks be disrupted.
The European Central Bank received orders for €489.19 billion ($639.96 billion) of three-year loans for banks under its latest long-term refinancing operation, far ahead of expectations and a record for any ECB facility. That should ensure the financial season of peace and goodwill extends well into the New Year, although whether it provides any longer-term solution is less clear.
True, the headline amount isn't all it seems. Banks appear to have taken the opportunity to roll over shorter-term ECB loans into three-year loans, based on the lower demand for this week's three-month and one-year auctions. The amount of new ECB money being pumped into the system may be only €210 billion, still significant but more in line with preauction forecasts. Meanwhile, only 523 banks took part in the auction, about half the number that took ECB money at the height of the crisis in 2009, which suggests many banks plan to tough out the difficult financial conditions.
Posted by Yulie Foka-Kavalieraki at 8:48 AM