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27 Jan 2015
Liquidity in EMU to remain above €100 billion near-term – Danske Bank
FXStreet (Edinburgh) - Analysts at Danske Bank assessed the current liquidity scenario in the euro bloc.
Key Quotes
“With the ECB QE programme starting in March, we will have to wait a little longer to see the liquidity injection in the Euro system and due to a large drag from the 3Y LTRO maturities, the first couple of months of the Eonia curve are behaving a bit more nervously than we are used to”.
“With 44.7bn running out this week and 137.1bn during February, the current level of 135bn is not able to withstand the paybacks”.
“However, as we have seen previously when liquidity squeezes are getting closer, the regular ECB operations meet increased demand with the full allotment”.
“Thus we think that today’s MRO and tomorrow’s 3m LTRO operation will offset at least part of the drag, leaving excess liquidity above the critical 100bn mark”.
Key Quotes
“With the ECB QE programme starting in March, we will have to wait a little longer to see the liquidity injection in the Euro system and due to a large drag from the 3Y LTRO maturities, the first couple of months of the Eonia curve are behaving a bit more nervously than we are used to”.
“With 44.7bn running out this week and 137.1bn during February, the current level of 135bn is not able to withstand the paybacks”.
“However, as we have seen previously when liquidity squeezes are getting closer, the regular ECB operations meet increased demand with the full allotment”.
“Thus we think that today’s MRO and tomorrow’s 3m LTRO operation will offset at least part of the drag, leaving excess liquidity above the critical 100bn mark”.