FRANKFURT, Nov 23 Key Euribor bank-to-bank
lending rates held steady for a third day running on Friday,
shoring up support as a year-long downtrend under the weight of
excess liquidity in money markets fades.
Bank-to-bank lending rates have fallen sharply since last
November when European Central Bank plans emerged to flood the
banking system with ultra-cheap, three-year cash.
But the impact of the excess liquidity has now been largely
priced in and there is uncertainty about whether the ECB will
cut interest rates further, helping keep rates steady.
Three-month Euribor rates, traditionally the
main gauge of unsecured bank-to-bank lending, were unchanged on
Friday at 0.190 percent.
The six-month rate was also unchanged at 0.351 percent and
the one-week rate held steady at 0.077 percent.
The overnight Eonia rate dipped to 0.071 percent from
Dollar-priced bank-to-bank Euribor lending rates
were mixed, with three-month rates
falling to 0.60385 percent from 0.60462 percent and one-week
rates rising 0.35154 percent from 0.35000 percent.
The ECB's decision in July to stop paying interest on
overnight deposits paved the way for further declines in
euro-denominated rates by removing the 0.25 percent floor for
the money market.
The amount of excess cash in the euro zone banking system is
still extremely high at 635 billion euros, according to Reuters
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
Policymakers showed initial interest in the idea but some
have since expressed reservations. Governing Council member
Ewald Nowotny said last month a negative deposit rate was not
Asked about the idea earlier this month, Draghi said: "We
haven't discussed (that)."
Euribor rates are fixed daily by the Banking Federation of
the European Union (FBE) shortly after 0900 GMT.
* For a table of the latest Euribor fixings for terms of one
week to one year, double click on
* For a table of the previous day's fixings of EONIA swap
rates, which show market expectations for future overnight
lending rates, double click on
* For graphs of historic Euribor and EONIA swap rates, right
click on the links in angle brackets below, and select 'Related
($1 = 0.7867 euros)
(Reporting by Frankfurt newsroom)