ECB Likely to Announce more Liquidity Facilities to the Banks

ECB Likely to Announce more Liquidity Facilities to the Banks


Quotes from Standard Chartered:
-We also expect the ECB to approve additional liquidity to banks, with a 1Y long-term refinancing operation (LTRO) the most likely format, although a 3Y LTRO is also a possibility. Stress across the European banking sector remains elevated, particularly in the periphery: bidding for the ECB's 7-day facility is still high (EUR 133bn provided at the facility settled on 8 August), although demand for the 1M facility is less strong (EUR 25bn, 8 August).
-Spanish banks' reliance on ECB funding rose to a record high in July, with gross borrowing rising to EUR 402bn, from EUR 365bn in June. A LTRO would be also an effective complement to peripheral bond buying, as peripheral banks could continue to support their domestic sovereign bond markets (although this 'loop' has raised concerns among some ECB Governing Council members).


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