Today the ECB lucked out, after 113 bidders submitted bids for €236 billion in bonds, at a rate of 0.65%, with the threshold €207 billion amount being covered comfortable at 1.19x. Yet one wonders what is it that caused the €50 billion swing in available capital for European banks (last week the tendered for amount was €194 billion). What is ironic is that earlier today, the ECB provided €252 billion in a liquidity providing operation (MRO) to 197 banks at a fixed rate of 1.00%. In other words, banks borrowed €252 billion at 1% from the ECB to lend €207 billion back at 0.65% to the ECB. And that is called a “successful” sterilization.
Charting the ECB’s recent sterilizations: