vendredi 20 mars 2015
Lending Spurt Backs ECB Optimism
Posted on 05:21 by nice news
There has been a notable shift in European Central Bank rhetoric on the eurozone’s economy since the bank last week launched its quantitative easing program.
Whereas officials spent much of late 2014 warning about the economic dangers posed by too-low inflation, thereby justifying their decision in January to buy more than EUR1 trillion in public and private bonds between this month and September 2016, they have recently been signaling that the bloc’s $13.5 trillion economy has turned the corner.
“Most indicators suggest a sustained recovery is taking hold,” ECB President Mario Draghi said on Monday.
Thursday brought some more good news. European banks tapped an ECB lending facility, at four-year maturities, to the tune of EUR97.8 billion ($104 billion). That was well above analyst expectations of something closer to EUR50 billion. Because banks must increase lending to the private sector as a condition for the cheap funds, the high demand signaled that banks finally see more opportunities to lend to businesses.
There’s another upshot: the ECB’s balance sheet. Officials have said they want to restore the balance sheet—the value of assets on the ECB’s books—to early 2012 levels, when it peaked just above EUR3 trillion. That implies a rise from current levels of around EUR900 billion.
That’s a lot of numbers, but the bottom line is that if future four-year loan installments see strong demand, on top of the EUR60 billion per month in assets the ECB has pledged to buy, the balance sheet could exceed levels from three years ago and even approach EUR3.5 trillion.
Whereas officials spent much of late 2014 warning about the economic dangers posed by too-low inflation, thereby justifying their decision in January to buy more than EUR1 trillion in public and private bonds between this month and September 2016, they have recently been signaling that the bloc’s $13.5 trillion economy has turned the corner.
“Most indicators suggest a sustained recovery is taking hold,” ECB President Mario Draghi said on Monday.
Thursday brought some more good news. European banks tapped an ECB lending facility, at four-year maturities, to the tune of EUR97.8 billion ($104 billion). That was well above analyst expectations of something closer to EUR50 billion. Because banks must increase lending to the private sector as a condition for the cheap funds, the high demand signaled that banks finally see more opportunities to lend to businesses.
There’s another upshot: the ECB’s balance sheet. Officials have said they want to restore the balance sheet—the value of assets on the ECB’s books—to early 2012 levels, when it peaked just above EUR3 trillion. That implies a rise from current levels of around EUR900 billion.
That’s a lot of numbers, but the bottom line is that if future four-year loan installments see strong demand, on top of the EUR60 billion per month in assets the ECB has pledged to buy, the balance sheet could exceed levels from three years ago and even approach EUR3.5 trillion.
Lending Spurt Backs ECB Optimism
Categories: Lending Spurt Backs ECB Optimism
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