FRANKFURT: Banks' deposits with the European Central Bank have hit a new record, data showed Monday, a possible sign of ongoing tensions in the financial system despite unprecedented injections of liquidity.
Banks put 463.6 billion euros ($588.7 billion) on deposit for 24 hours at the ECB overnight Sunday, beating the previous record of 455 billion euros set last week.
Rising levels of deposits at the ECB bank are seen as a sign of market tension, since the money deposited earns interest of 0.25 percent, much less than the rate available on the interbank market.
Thus, heavy use of the facility suggests banks favour parking the money at low interest with the ECB rather than lending it to each other.
The phenomenon appears particularly significant because it comes after eurozone banks borrowed a nearly half a trillion euros from the ECB last month in a brand-new three-year lending facility.
The ECB agreed to loan a record 489.2 billion euros to 532 banks at the end of last year in the longest-ever refinancing operation in a move to avert a possible credit crunch.
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