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Why ECB’s TLTRO Fizzled: European Balance Sheets Are Saturated With Debt Already
It seems European banks are not all that eager to take up more central bank credit. The ECB has begun to offer its dirigiste “targeted long term refinancing operations” at a spread of 10 basis points above the repo reference rate. Since the repo rate was lowered from 0.15% to 0.05% at the last ECB council meeting in early September, this type of funding has become even cheaper. However, when banks obtain funding by posting collateral with the ECB, this automatically creates additional bank reserves – and those bear a penalty rate of 20 basis points these days. We continue to be mystified by the introduction of ... (full story)
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- Sep 21, 2014 4:21am Sep 21, 2014 4:21am
- althar
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Corripe Cervisiam!
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