Still Stressed - ECB Deposit Facility Usage Passes €300 Billion, Highest Since June 2010
According to the ECB, deposit facility usage - an indicator of capital flight in the European banking system expressed in euros not dollars, just hit the highest since June 2010, over €300 billion for the first time in 18 months, rising from €297 billion to €304 billion overnight. On its face, this is not a good indication, with the only saving grace being that this was potentially before the market open on November 30, before the central bank announcement. Marginal lending, or the ECB's discount window, also rose from €2.7 billion to €4.6 billion, the highest since October 18. Needless to say tomorrow's deposit facility update will be critical because unless there is a major drop in usage, it will confirm that in addition to a USD-funding shortage which should have been ameliorated even if very briefly, other EUR-based risks are being observed by Europe's banks, who better than anyone know what the interbank system risks are, and the Fed's USD liquidity injection will have failed to achieve anything except to ramp risk higher for a day or two.
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