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Latest data shows developing trends in the European Central Bank’s refinancing operations

The stock of liquidity supplied through the ECB’s open market operations has remained relatively stable, though there is a clearer change in the country composition.

By: Date: December 12, 2017 Topic: European Macroeconomics & Governance

At this stage, open market operations of the European Central Bank (ECB) primarily consist of long-term funding with maturity exceeding three years, i.e. mostly Targeted Long-Term Refinancing Operations (TLTROs). The importance of traditional, one-week Main Refinancing Operations (MRO) and three-month Long-Term Refinancing Operations (LTROs) has all but disappeared. More recently, the relative role of open market operations as a whole in liquidity provision has declined at the expense of that of the Asset Purchase Programme (APP). And yet, the country distribution of open market operations shows only gradual change.

Between early-2015 and March 2017, the stock of liquidity supplied through open market operations remained relatively stable. However, a trend in the country composition is evident; it remains unaltered even after the most recent round of TLTROs in March 2017, which increased the stock of open market operations by roughly €200 billion and resulted in the “jumps” seen in the figure. Specifically, as of September 2017, the combined share of liquidity held with the Spanish, Greek, Portuguese and Irish national central banks (NCBs) stood at 28%, continuing its downward trajectory dating back to January 2015 (roughly 20 percentage points lower now than then). At the same time, despite small deviations, Italy’s share remains stable at above 30% of the total. Finally, there appears to be a slow, but steady, increase in the share of open-market operations done through the Bundesbank and the Banque de France.

Apart from the update of the time series itself, the most recent version of our Eurosystem liquidity distribution dataset incorporates additional changes. Importantly, it blends series on all euro members recently published by the ECB – which are, however, available since June 2016 only – with the data it has traditionally gathered from NCBs’ balance sheets. Thus, the dataset achieves the most comprehensive picture possible on the distribution of liquidity among euro area members: 10 countries have complete series from January 2003 to September 2017. Owing to the newly published ECB series, data is now available for all 19 eurozone members since June 2016.


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