FRANKFURT: Banks' deposits with the European Central Bank have hit yet another new record, data showed Monday, just days after the ECB pumped more than half a trillion euros into banks to unclog seized credit markets.
Banks put 820.8 billion euros ($1.08 trillion) on deposit for 24 hours at the ECB overnight Friday, beating the previous record set the day before of 776.9 billion euros.
Rising levels of deposits at the central bank are seen by some as a possible sign of market tensions 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.
But the massive amount currently held on deposit is not seen by analysts as surprising in the wake of last week's long-term refinancing operation (or LTRO) in which the ECB pumped a record 529.5 billion euros into euro area banks to avert a credit crunch.
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