![]() It stood at 212.5 billion euros this week, up from 184.7 billion euros three weeks ago. While it announced on April 24 that it was harmonizing the disclosure of ELA on the euro system’s balance sheet under “other claims on euro-area credit institutions,” this item contains more than just ELA. The ECB buries information about ELA in its weekly financial statement. “On the one hand, it increases uncertainty, but at the same time we do not necessarily want to know how bad things are as it can add fuel to the fire.” “The lack of transparency is a double-edged sword,” said David Owen, chief European economist at Jefferies Securities International in London. ![]() The first rule of ELA is you don’t talk about ELA. ![]() Tenebrarum also points to the Bloomberg article Frozen Europe Means ECB Must Resort to ELA for Banks. If Spain leaves, its 11.9% will be reallocated to the other countries. The Netherlands would be responsible for about 5.7% of any Target2 losses associated with a Greek default, whether the money is sitting in German banks, Austrian banks, Dutch banks, etc. The table may not be perfectly up to date, but it should be close enough. There is a table of percentage Responsibility Percentages on Wikepedia. Germany is responsible for its share of any such losses at the ECB according to its percentage in the EMU, roughly 27%.įrance, Italy, and Spain are next in line to take losses. This is precisely one of the things that had everyone excited. If it does, Greece will repay the credit line with Drachmas, not euros (or if the radical left had won, perhaps not at all). This is not a major problem unless Greece changes currencies or defaults. There are some restrictions, but not many. Simply put, the ECB sends money to the Bank of Greece in a kind of open credit line to make up for the cash that left the Greek bank. Target claims are created because the Greek bank that loses deposits gets funding via the ECB’s ELA (Emergency Liquidity Assistance) program. ![]() To the extent it doesn’t want to recycle them (in the past, it may have used them to buy Greek government bonds), it deposits them with a NCB (national central bank) – in this case the Bundesbank (Germany’s Central Bank). If a Greek depositor sends money to a foreign bank (say a German bank), that bank now has additional deposits. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |