Headline figures from the ECB’s weekly tender support the idea that a regular borrower may have been absent. Only 137 billion euros was borrowed on Tuesday, 19 billion less than last week and 23 billion less than the Reuters consensus.
If the fat fingers theory is correct, the spike will appear again in tonight’s borrowing figures, released just after 3am ET Monday.
Barclays Capital is alternatively speculating that the ECB might have forced one player heavily dependent on its loans to switch to marginal lending, as part of a wider effort to ‘clean’ the system.
But James Chappell at Olive Tree says that would surprise him. "For banks to be made entirely reliant on more expensive, overnight funding would create greater systemic risk and possibly panic in the market," he tells me. "The ECB is more focused in trying to get EU governments to buy their own peripheral debt as a way to reduce reliance on it as a lender of last resort."
Perhaps the biggest takeaway is that Euro Zone’s banks still borrowed 137 billion euros at the ECB’s weekly tender. "It’s indicative of how many individual banks have loans that exceed deposits," argues Chappell.
"Under normal circumstances that would make them structurally dependent on wholesale funding from the market. But the stress that still exists in the market means they are totally locked out from wholesale funding if they’re located in Greece, Portugal and Ireland."
- New CNBC.com Currency Blog "Money in Motion."