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A critique of the ECB's liquidity policies | 66 comments (66 topical, editorial, 0 hidden)
Re: A critique of the ECB's liquidity policies (4.00 / 3)
I'd say it's more about unhealthy banks scrambling for liquidity.

EONIA, unlike the ECB's MRO or MLF, doesn't require the posting of collateral.

So a bank all of whose clean assets are already pledged at the MRO needs to look at the unsecured interbank market. If they are paying more for Eonia than they would pay for 3-month Euribor it means the Euribor is closed to them.

A key difference between Eonia and Euribor is that Euribor is an offered rate whereas Eonia is the average rate at which actual overnight lending took place.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

by Carrie (migeru at eurotrib dot com) on Fri Feb 25th, 2011 at 04:54:01 AM EST
[ Parent ]
Re: A critique of the ECB's liquidity policies (4.00 / 2)
OK, got it. A little more reaches the light of day (mine, anyway) with each post.

Maieutics.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 25th, 2011 at 05:01:46 AM EST
[ Parent ]
Maieutics (none / 1)
For me, too.

I understand a lot more now than a week ago, when I fired off the first inchoate version of my argument.

Appropriately, now I know more about how much I don't know. At least I have located a bunch of data I have yet to examine.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

by Carrie (migeru at eurotrib dot com) on Fri Feb 25th, 2011 at 05:24:37 AM EST
[ Parent ]
Known unknowns, huh? (none / 1)
(channelling Unca Donald)

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Fri Feb 25th, 2011 at 10:08:37 AM EST
[ Parent ]
Re: A critique of the ECB's liquidity policies (none / 1)
And a spike about once a month. Interesting. Audits or reports of some kind? Liquidity-stress from real economy (pay-day or something)?

Banking practise details needed here, I suspect.

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by A swedish kind of death on Fri Feb 25th, 2011 at 06:38:05 AM EST
[ Parent ]
Re: A critique of the ECB's liquidity policies (4.00 / 2)
Migeru:
the maintenance periods are likely responsible for the heartbeat pattern
I have not yet attempted to correlate the ECB's reserve maintenance calendar with the spikes.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
by Carrie (migeru at eurotrib dot com) on Fri Feb 25th, 2011 at 06:43:44 AM EST
[ Parent ]

A critique of the ECB's liquidity policies | 66 comments (66 topical, 0 editorial, 0 hidden)
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