Emergency overnight borrowing from the European Central Bank jumped to near a two-year high, leaving money market traders wondering whether a bank was in trouble or if the spike was down to a simple data input error.
ECB figures showed banks borrowed more than 15 billion euros in high-cost emergency overnight funding. It is the highest amount since June 2009, compares to the 1.2 billion euros borrowed the previous night and comes just a day after banks received their regular injection of weekly ECB funding.
Overnight borrowing from the ECB is usually well below 1 billion euros. The figures sent jitters through interbank lending markets as dealers tried to determine whether a bank was facing serious funding problems or if it was just a short-term issue.
The extra 0.75 percent banks have to pay for overnight funding normally means it is used only as a last resort. "If it was a one-day mistake, it will disappear tomorrow, but if it stays then you start worrying," one eurozone money market trader said.
The ECB and the Bundesbank declined to comment. Other traders said there was no sign of any banks desperately searching for funding late on Wednesday, suggesting it may be that a bank simply made a data input error. The last time overnight borrowing exceeded 10 billion was on June 24, 2009, when it was 28.7 billion euros. This year, emergency overnight borrowing has been above 1 billion euros only twice, both times this week.
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