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Measure of Fear: Banks Bunker Hundreds of Billions in Deposits at ECB
Der Spiegel ^ | 12/27/2011

Posted on 12/27/2011 1:25:39 PM PST by Olog-hai

The sum of overnight deposits at the European Central Bank (ECB) is often considered to be an indicator of the level of fear brewing within the financial sector. The greater the degree of distrust between banks, the more money banks tend to deposit on a daily basis with the ECB, where interest rates are low, but deposits more secure. This week has seen the level of deposits at the ECB's overnight facility rise to close to €412 billion ($538.4 billion)—the greatest amount seen since the euro's introduction, and representing a single overnight increase on Monday of €65 billion.

The previous record had been reached in the summer of 2010, when banks parked around €385 billion at the ECB.

Normally banks tend to lend any excess funds to each other. By doing so, they can make more money—especially given that interest rates at banks are currently twice as high as those offered by the ECB. But the interbank market has been disrupted for weeks now, prompting concerns that the credit crunch last seen after the collapse of Lehman Brothers has returned. European banks no longer trust each other because it is unclear to what extent individual banks are exposed to government bonds from countries hit by the debt crisis, and whether those institutions are in jeopardy. Instead, they are turning to the ECB as a safe haven for their money. …

(Excerpt) Read more at ...

TOPICS: Business/Economy; Culture/Society; Foreign Affairs; News/Current Events
KEYWORDS: ecb; eucrisis; europeanunion; financialcrisis

1 posted on 12/27/2011 1:25:43 PM PST by Olog-hai
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To: Olog-hai

Just getting ready for the big run on the banks. The mad dash for Air Jordans last week was nothing compared to what’s coming.

2 posted on 12/27/2011 2:40:37 PM PST by bgill (The Obama administration is staging a coup. Wake up, America, before it's too late.)
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To: bgill
They borrowed the turdos at 1% and deposited it for .25% thereby paying ECB .75% to keep the turdos safe. Who knows better the status of euro banks better than other turdo banks?

Also, turdos in ECB are quick access to dollar swaps for those clients of capital flight.

This €500 billion in liquidity keeps these insolvent banks humming for a few more weeks allowing customers to bag it on turdos.


3 posted on 12/27/2011 3:34:15 PM PST by bruinbirdman ("Those who control language control minds." -- Ayn Rand)
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To: Olog-hai
To top it off, the ECB is buying US Treasurys to secure their capital base.

Bank run? Yeah, it's ongoing. The smart money is getting out before the BIG capital controls.

Expect outflow controls by the beginning of the year.

Not even Eurozone commercial banks want Euros. It's over.

4 posted on 12/27/2011 4:20:46 PM PST by Mariner (War Criminal #18)
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