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The 13 billion figure is inaccurate or does not mean what you say it means.

Businessweek: ECB Fails to Sterilize Bond Purchases With Deposits (December 29, 2010)

The European Central Bank failed to fully neutralize the extra liquidity created by its bond purchases for a second time since the program began in May.

The Frankfurt-based ECB said today it drained 60.78 billion euros ($80.66 billion) from money markets via seven-day term deposits, almost 13 billion euros less than the 73.5 billion euros it intended to absorb.


The central bank started buying government bonds on May 10 in an effort to restore confidence in markets rattled by the sovereign debt crisis. To ensure the purchases don't swell the money supply and create inflation risks, the ECB each week drains the amount of extra liquidity it has created by offering banks seven-day term deposits.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 16th, 2011 at 04:31:03 AM EST
[ Parent ]
Already in June 2010: ECB fixed-term deposit FAIL (FT Alphaville, June 29 2010)
The ECB failed to auction the €55bn in fixed term deposits it had planned to, and what it did auction (€31.86bn) was at a much-higher rate (0.54 per cent) than what it offered at the start of its Securities Markets Programme (SMP). The market seems to be holding tight to liquidity.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Jun 16th, 2011 at 04:32:57 AM EST
[ Parent ]
Quoting from ECB's annual accounts (pdf, page 15):
The ECB's holdings of securities purchased under both programmes at the end of 2010 were
as follows:
                                  2010 €            2009 €               Change €
Covered bond purchase programme   4,823,413,246     2,181,842,083     2,641,571,163
Securities Markets Programme      13,102,563,262           0           13,102,563,262
Total                            17,925,976,508    2,181,842,083    15,744,134,425

and comparing with their current position

which is probably an apples-to-oranges comparison (holdings/outstanding amount?)

So I got the wrong end of the stick, there has not been a massive buy-up of bonds by the ECB in 2011. They have either decided that the markets are correctly pricing the bonds (in contradiction with their "mark-to-book" policy), or have renounced market intervention (recognition that they are powerless?)

In any case, if the ECB holds €50B of Greek bonds, they were mostly bought in 2010, and that comes out to more than a third of the total of SMP holdings (75B) and CBP (60B), no?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Thu Jun 16th, 2011 at 04:59:28 AM EST
[ Parent ]
These must be direct purchases by the ECB directly.

The rest of the Securities Market Programme balance of 70 billion must be purchases by the National Central Banks.

The Eurosystem is a complicated monster.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Jun 16th, 2011 at 05:01:43 AM EST
[ Parent ]


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