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Central bank liquidity management means supplying to the market the amount of liquidity consistent with a desired level of short-term interest rates. This is achieved through open market operations and requires analysis and forecasting of the liquidity situation in the euro area.
The analysis of the liquidity conditions in the euro area starts with the Eurosystem balance sheet: Weekly financial statement
| Assets (liquidity supply) |
|---|
| Open market operations |
| Marginal lending facility |
| Liabilities (liquidity needs) |
|---|
| Current accounts |
| Deposit facility |
| Net liquidity effect from Autonomous Factors and SMP |
The liquidity needs of the banking system result from the minimum reserve requirements imposed on euro area credit institutions and from autonomous factors, which are normally beyond the direct control of the ECB. Such factors can be banknotes in circulation and government deposits with some national central banks.
The ECB normally aims to satisfy the liquidity needs of the banking system via its open market operations.
Finally, counterparties can access the Eurosystem's standing facilities with an overnight maturity.
The regular publication of figures relating to the liquidity position of the euro area banking system vis-à-vis the Eurosystem also takes into account all non-standard monetary policy measures that have been used since August 2007:
* Outstanding amounts of liquidity provided under the Securities Markets Programme can be found on the Weekly Financial Statement of the Eurosystem as well as in the section "Open Market Operations.
| Daily liquidity conditions (EUR millions) | |
|---|---|
| Reserve maintenance period: | 08/05/2013 to 11/06/2013 |
| Average reserve requirements: | 105,303 |
| Figures as at | 16/05/2013 |
| Average current acc. holdings in the MP: | 330,481 |
| Current account holdings: | 313,327 |
| Use of the marginal lending facility: | 106 |
| Use of the deposit facility: | 96,651 |
| Net liquidity effect from Autonomous Factors and SMP (*): | 287,840 |
| (*) SMP = Securities Market Programme | |
| Forecasts of autonomous factors (EUR millions) | |
|---|---|
| Estimate on 14/05/2013 of average daily autonomous factors for the period 13/05/2013 to 21/05/2013: | 487,100 |
On 10 May 2010, the central banks of the Eurosystem started purchasing securities in the context of the Securities Markets Programme (SMP), with a view to addressing the severe tensions in certain market segments which have been hampering the monetary policy transmission mechanism. Under the SMP, public and private debt securities are considered eligible for purchase. For details, see ECB decision of 14 May 2010 ( ECB/2010/5 ) and the press release: "ECB decides on measures to address severe tensions in financial markets" (10 May 2010).
| Outstanding amount * | |
|---|---|
| € mil. | 200,995 |
| Date | 3 May. 2013 |
| * Settled amount as of given date | |
With a view to leaving liquidity conditions unaffected by the programme, the Eurosystem re-absorbs the liquidity provided through the SMP by means of weekly liquidity-absorbing operations. The intended amount for absorption equals the cumulative size of settled SMP transactions at the end of the preceding week, rounded to the nearest half billion. For more details on SMP settled volumes see Weekly Financial Statement and for the announcements of the SMP-sterilising operations see the tab “Ad-hoc communications” in "Open Market Operations" .
In the context of the ECB’s liquidity analysis, the liquidity provided through the SMP is displayed on a daily basis together with the liquidity effect of autonomous factors, under the item “Net liquidity effect from Autonomous Factors and SMP”. However, the estimate of average autonomous factors published by the ECB on MRO announcement and MRO allotment days excludes the effect of SMP liquidity.
| Outstanding amount * | |
|---|---|
| € mil. | 46,150 |
| Date | 16 May. 2013 |
| * Settled amount as of given date | |
The Eurosystem’s Covered Bond Purchase Programme ended, as planned, on 30 June 2010 when it reached a nominal amount of €60 billion. The Eurosystem intends to hold the assets bought under this programme until maturity.
For details, see ECB decision of 2 July 2009 ( ECB/2009/16 ) as well as the press releases "Purchase programme for covered bonds" (4 June 2009) and "Covered bond purchase programme completed" (30 June 2010).
| Outstanding amount * | |
|---|---|
| € mil. | 16,077 |
| Date | 16 May. 2013 |
| * Settled amount as of given date | |
In November 2011, the Eurosystem launched a second Covered Bond Purchase Programme (CBPP2), with a view to (a) easing funding conditions for credit institutions and enterprises; and (b) encouraging credit institutions to maintain and expand lending to their clients. Under the CBPP2, eligible covered bonds for a total nominal amount of €40 billion are to be purchased up until October 2012.
Purchases can be conducted in both the primary and the secondary markets.
| Cumulative purchases breakdown | ||
|---|---|---|
| Market | Primary | Secondary |
| € mil. * | 6,015 | 10,375 |
| Share * | 36.70% | 63.30% |
| Date | 31 October 2012 | |
| * settled amounts as of given date | ||
For eligibility and other details, see ECB decision of 3 November 2011 ( ECB/2011/17 ) and the press release "ECB announces details of its new covered bond purchase programme (CBPP2)" (03 November 2011).
In the context of the ECB’s liquidity analysis, the liquidity provided through the CBPP2 is displayed on a daily basis under the item “Open Market Operations” (see Liquidity analysis) and is fully taken into account for the calculation of the MRO benchmark allotment amount.
