ECB Lends Record 442 Billion Euros for 12 Months

[Debaser82]

Quote from Martinghoul:

The idea behind the ECB program is to proactively deal with any liquidity concerns people might have about EUR banks, especially over year-end (so I agree with you, scriabin, although there's an expectation that some of this money will find its way into the interbank mkt. Not unsecured, mind you).

The fact that this affects the term structure (the EONIA curve is arnd 10bps lower) is just a by-product of the expectation of lower realized EONIA fixings going fwd.

Care to comment on the health of the Euro banking system?

Thanks.

 

[Martinghoul]

Quote from Daal:

As I understand the ECB has been liberal in their mortgage collateral requirements, so the bank can use their own lending to speculate on the low risk carry trade

Well, if you're a bank that can get a AAA rating on its ABS AND you're willing to take a minimum 12% haircut on it, pls go right ahead (there are some other restrictions). I am not sure what sort of upside you can realize from such speculation, so I wouldn't really go as far as calling the current collateral requirements 'liberal'.

 

[Martinghoul]

Quote from Debaser82:

Care to comment on the health of the Euro banking system?

Thanks.

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