Christine
04-25-2012, 09:02 AM
BRUSSELS (MNI) – European Central Bank President Mario Draghi on
Wednesday launched a strong defense of the ECB’s Long Term Refinancing
Operations, through which the bank pumped E1 trillion into the European
banking system.
“The LTROs have been quite timely and all in all a successful
operation,” Draghi told the European parliamentarians here. “If the only
thing we managed to get was to buy time, and that’s not all we managed,
that in itself would be an success.”
Hundreds of billions of euros of bank and sovereign bonds needed to
be refinanced at the start of this year when markets were closed and the
LTRO helped avoid a major credit crunch, he said.
Admitting that the ECB would have liked to see more of the E1
trillion in cheap three-year loans it distributed to banks under the two
LTROs trickling through to the real economy, Draghi nevertheless said
that the LTROs helped remove one of the main barriers to lending.
“Banks don’t lend either because they are short of funding, they
are short of capital or there is no demand. We removed the first of the
three factors,” Draghi said.
“We cannot replace the lack of capital or the lack of demand,” he
said, pointing out that about 65% of banks have so far complied with the
targets set by the European Banking Authority.
Results from the ECB’s bank lending survey, published Wednesday,
show that the constraints on bank lending have been eased by the ECB’s
funding and that the main constraint to lending is now poor demand for
credit.
According to the ECB’s estimates, the LTROs resulted in a net
liquidity injection of around E520 billion, once banks’ shifting of
liquidity between operations is considered, Draghi said.
Although this liquidity “is mostly with the ECB” as a matter of
“mathematical, arithmetical fact”, the money “in the mean time has
changed hands,” he said.
The ECB has observed that the portfolio of banks’ government bond
holdings has increased, but “contrary to the general impression,
measures of riskiness between national banks and sovereigns have
decoupled,” Draghi said, adding that they were now “less correlated.”
“The sovereigns and banks are less correlated than they were in
November. This is quite another positive fact that goes against the
general perception,” the ECB president said.
[TOPICS: M$$EC$,M$X$$$,MGX$$$,M$$CR$,MT$$$$]
http://feeds.feedburner.com/~ff/forexlive-rss?d=yIl2AUoC8zA (http://feeds.feedburner.com/~ff/forexlive-rss?a=NVQPWWHvNVQ:b1g6zWzV00w:yIl2AUoC8zA) http://feeds.feedburner.com/~ff/forexlive-rss?i=NVQPWWHvNVQ:b1g6zWzV00w:V_sGLiPBpWU (http://feeds.feedburner.com/~ff/forexlive-rss?a=NVQPWWHvNVQ:b1g6zWzV00w:V_sGLiPBpWU) http://feeds.feedburner.com/~ff/forexlive-rss?d=qj6IDK7rITs (http://feeds.feedburner.com/~ff/forexlive-rss?a=NVQPWWHvNVQ:b1g6zWzV00w:qj6IDK7rITs)
Wednesday launched a strong defense of the ECB’s Long Term Refinancing
Operations, through which the bank pumped E1 trillion into the European
banking system.
“The LTROs have been quite timely and all in all a successful
operation,” Draghi told the European parliamentarians here. “If the only
thing we managed to get was to buy time, and that’s not all we managed,
that in itself would be an success.”
Hundreds of billions of euros of bank and sovereign bonds needed to
be refinanced at the start of this year when markets were closed and the
LTRO helped avoid a major credit crunch, he said.
Admitting that the ECB would have liked to see more of the E1
trillion in cheap three-year loans it distributed to banks under the two
LTROs trickling through to the real economy, Draghi nevertheless said
that the LTROs helped remove one of the main barriers to lending.
“Banks don’t lend either because they are short of funding, they
are short of capital or there is no demand. We removed the first of the
three factors,” Draghi said.
“We cannot replace the lack of capital or the lack of demand,” he
said, pointing out that about 65% of banks have so far complied with the
targets set by the European Banking Authority.
Results from the ECB’s bank lending survey, published Wednesday,
show that the constraints on bank lending have been eased by the ECB’s
funding and that the main constraint to lending is now poor demand for
credit.
According to the ECB’s estimates, the LTROs resulted in a net
liquidity injection of around E520 billion, once banks’ shifting of
liquidity between operations is considered, Draghi said.
Although this liquidity “is mostly with the ECB” as a matter of
“mathematical, arithmetical fact”, the money “in the mean time has
changed hands,” he said.
The ECB has observed that the portfolio of banks’ government bond
holdings has increased, but “contrary to the general impression,
measures of riskiness between national banks and sovereigns have
decoupled,” Draghi said, adding that they were now “less correlated.”
“The sovereigns and banks are less correlated than they were in
November. This is quite another positive fact that goes against the
general perception,” the ECB president said.
[TOPICS: M$$EC$,M$X$$$,MGX$$$,M$$CR$,MT$$$$]
http://feeds.feedburner.com/~ff/forexlive-rss?d=yIl2AUoC8zA (http://feeds.feedburner.com/~ff/forexlive-rss?a=NVQPWWHvNVQ:b1g6zWzV00w:yIl2AUoC8zA) http://feeds.feedburner.com/~ff/forexlive-rss?i=NVQPWWHvNVQ:b1g6zWzV00w:V_sGLiPBpWU (http://feeds.feedburner.com/~ff/forexlive-rss?a=NVQPWWHvNVQ:b1g6zWzV00w:V_sGLiPBpWU) http://feeds.feedburner.com/~ff/forexlive-rss?d=qj6IDK7rITs (http://feeds.feedburner.com/~ff/forexlive-rss?a=NVQPWWHvNVQ:b1g6zWzV00w:qj6IDK7rITs)