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Deposits at ECB inch up bond buys continue

Source: Reuters - Tue 6th Oct 2009

The amount of cash deposited by banks at the European Central Bank rose further above the 150 billion euro mark, data showed on Tuesday, as banks shuffled the 75 billion of one-year funding injected by the ECB last week.

The ECB's 60 billion euro covered bond buying programme also continued to make progress. The total value of bonds purchased to-date reached 16.09 billion euros, up from 15.580 billion euros.

The ECB said commercial banks deposited 153.670 billion euros at the ECB overnight, compared to 150.594 billion the previous day. The deposits have risen since banks received 75 billion euros of one-year ECB funds last week.

The amounts parked at the ECB's deposit facility have been high since it flooded money markets with almost half a trillion euros at the end of June in the first of three planned injections of one-year funds.

However, the amount parked at the ECB is less than half the level deposited by banks after the ECB's first one-year tenderin June when it flooded markets with a record 442 billion euros.

The amount banks borrowed from the ECB's overnight account also increased to 628 million euros from 91 million euros previously, the ECB added.

The ECB and the 16 euro zone national central banks are buying euro-denominated covered bonds - debt backed by a pool of assets such as mortgage loans that remain on the issuing bank's balance sheet - over the next year, from both primary and secondary markets.

After 3 months, the ECB has spent about a quarter of the 60 billion euros earmarked for the programme, and purchases are proceeding steadily.

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