The amount of cash deposited by commercial banks overnight with the European Central Bank spiked last week, ECB data showed Monday, a sign that they may be increasingly reluctant to lend.
ECB data showed commercial banks parked 107.2 billion euros ($154.4 billion) in the central bank's deposit facility on Friday, up from 90.5 billion euros on Thursday.
While the amount remained well below the year-high of 145.2 billion euros in early August, it is nonetheless a substantial amount for banks to deposit at a rate of 0.75 per cent, which means they forego earnings rather than lend it to other banks at the current going rate of around 0.89 per cent.
According to Lena Kormileva, a strategist at Brown Brothers Harriman quoted by Dow Jones Newswires, the figure shows that 'the ECB's intermediation (in the money markets) remains broken.
Source : New Age
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