FRANKFURT -(Dow Jones)- Banks lowered their use of the European Central Bank’s overnight deposit facility, ECB data showed Friday, but excess liquidity remains high going into 2011.
At the same time, banks borrowed sharply less from the ECB’s emergency 1.75% marginal lending facility, following the ECB’s special 13-day refinancing operation Thursday, the data showed.
Financial institutions across the 16-nation euro zone parked EUR43.619 billion overnight with the ECB at 0.25%, a rate that is below the overnight market rate, currently at 0.40%. The amount deposited with the ECB was down about EUR22.0 billion from the previous day.
However, the usage of the ultra-safe deposit facility is high compared with levels recorded last week, as banks are hoarding liquidity ahead of the Christmas holiday. If markets are functioning properly, banks use the ultra-safe facility to the tune of only a few hundred million euros.
ECB data also showed Friday that banks sharply lowed their use of the ECB’s emergency 1.75% marginal lending facility. Banks borrowed EUR229 million overnight from the ECB Thursday–an amount within the normal ranges–after requesting almost EUR3.5 billion Wednesday.
ECB website: http://www.ecb.int
-By Nina Koeppen, Dow Jones Newswires; +49 171 569 4340; nina.koeppen@dowjones.com
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