Thu Feb 24th, 2011 at 02:23:28 AM EST
My views on the ECB's policies get airtime on Eurointelligence: A critique of the ECB’s liquidity policies
At the end of last week the financial community was awash with speculation surrounding a more than 10-fold increase in volume of the ECB's Marginal Lending Facility (MLF), which offers banks an overnight gateway to cash at a penalty rate. It turned out that Anglo Irish Bank and Irish Nationwide Building Society wanted to release some assets from the weekly collateral held by the ECB in its main financing operations.
This incident may have been much ado about nothing, but it provides an opportunity to take a closer look at the liquidity conditions in the Eurozone interbank market, and the picture isn't pretty. In its deflationary zeal, the ECB is draining an increasing amount of cash – in the form of one-week deposits - from the money markets to offset its modest purchases of sovereign Euro bonds.
Eurointelligence's editor Wolfgang Münchau did a good job of streamlining my turgid writing.
ET got a bit of promotion, too:
The author is a risk analyst at a major eurozone bank and blogs regularly at European Tribune (EuroTrib.com)
You can read the full article on the Eurointelligence site, and comment here.