FRANKFURT: Key Euribor bank-to-bank lending rates steadied on Monday in a fresh sign they may be finding a floor after a year-long slide under the weight of excess liquidity in money markets.
Three-month Euribor rates, traditionally the main gauge of unsecured bank-to-bank lending, were unchanged at 0.204 percent. The six-month rate held steady at 0.405 percent.
The shorter term one-week rate edged up to 0.080 percent from 0.079 percent, while the overnight Eonia rate rose to 0.095 percent from 0.093 percent.
Bank-to-bank lending rates had been falling steadily since November last year when news broke that the ECB was going to flood the banking system with ultra-cheap, three-year cash.
The bank's decision in July to stop paying interest on overnight deposits has allowed the fall to continue by removing the 0.25 percent floor for the money market.
Dollar-priced bank-to-bank Euribor lending rates fell, with three-month rates at 0.58923 percent from 0.59000 percent and overnight rates at 0.30154 percent from 0.30231 percent.
The amount of excess cash in the euro zone banking system is extremely high at about 676 billion euros according to Reuters calculations.
With that figure set to remain high for the foreseeable future, money market experts have focused on whether the ECB could copy Denmark's example and start charging banks to deposit cash overnight. Policymakers showed initial interest in the idea but some have since expressed reservations.
ECB Governing Council member Ewald Nowotny told an investment conference on Friday that current interest rates were appropriate and inflation concerns were not justified.
Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT.
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