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Dublin: -3°C Tuesday 2 March 2021
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Back with a bang: ECB bought €3.77 billion of bonds last week

After slowly winding down its programme of hoovering up eurozone debt, the ECB was called back into action in a big way.

The ECB's new headquarters, the 'Skytower', under construction in Frankfurt.
The ECB's new headquarters, the 'Skytower', under construction in Frankfurt.
Image: Michael Probst/AP

THE EUROPEAN CENTRAL BANK played a more active role in the bond markets last week than it had done in almost two months – intervening to buy billions of euro worth of bonds of eurozone member states.

Data supplied by the ECB this morning showed that the bank had spent €3.766 billion buying the bonds last week, bringing its total portfolio of eurozone shares to €217 billion.

Its involvement in the bond markets was necessitated by the renewed fears over the political rescue of the eurozone, in a tumultuous week which ended with the downgrade of many benchmark countries including France.

Separately, the ECB said that over €493 billion of currency had been lodged in its overnight deposit facility, the highest figure ever recorded as having been lodged in the facility.

The staggering amount of currency being hoarded in the facility indicates more certainly that banks are saving up the cash they had themselves borrowed from the ECB late last year – apparently being willing to take a small loss on the cash rather than risk losing it by lending it to businesses or to other banks.

European banks borrow from ECB – and then lodge the cash with the ECB again

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Gavan Reilly

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