Bloomberg News

ECB Says Banks’ Overnight Deposits Rise to New Record High

January 16, 2012

Jan. 16 (Bloomberg) -- The European Central Bank said overnight deposits from commercial banks surged to a record high, as the reserve maintenance period comes to an end.

Euro-area banks placed 493.3 billion euros ($625 billion) with the Frankfurt-based ECB, up from 489.9 billion the previous day. That’s the highest level since the euro was introduced in 1999.

The ECB’s reserve maintenance period, during which banks are required to hold a certain amount of reserves on average, is drawing to a close tomorrow. That can provoke fluctuations in deposits as lenders, who tend to front-load ECB borrowing, seek to balance their accounts.

The ECB decided last month to temporarily suspend holding fine-tuning refinancing operations, and to cut in half banks’ reserve ratio to 1 percent. That may increase excess liquidity in the banking system and further boost deposits.

Banks also borrowed 2.4 billion euros in emergency overnight funds, at the rate of 1.75 percent, the ECB said.

The ECB last month loaned 523 banks a record 489 billion euros for three years to ease the effects of the sovereign debt crisis on the banking system.

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To contact the reporter on this story: Jeff Black in Frankfurt at jblack25@bloomberg.net

To contact the editor responsible for this story: Jana Randow at jrandow@bloomberg.net


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