FRANKFURT, Jan 20 The key euro-priced
bank-to-bank lending rate held steady on Monday as banks slowly
reduce their reliance on the European Central Bank for funding
and turn to the market again in a sign of growing confidence.
The ECB is following the latest developments in money
markets closely, having pledged to intervene should the rise in
bank-to-bank lending rates that underpin borrowing costs across
the economy become "unwarranted".
A gradual rise in the rates is seen to reflect banks
beginning to wean off central bank funding and tapping markets
again, a kind of normalisation, but if the increase accelerates
it could threaten the euro zone's recovery.
One of the drivers pushing inter-bank rates higher is
falling excess liquidity - money banks have beyond what they
need for their day-to-day operations.
On Monday, excess liquidity stood at 135
billion euros, slightly higher than Friday's 131 billion euros,
which was the lowest since September 2011, before the ECB
launched the long-term refinancing operations (LTROs) and pumped
more than 1 trillion euros into the system to ease banks'
It peaked in mid-2012 at just above 800 billion.
On Monday, the three-month Euribor rate,
traditionally the main gauge of unsecured bank-to-bank lending,
stayed at 0.302 percent, the highest since August 2012.
The six-month Euribor rate held at 0.408
percent and the shorter-term one-week rate fell to
0.221 percent from 0.227 percent.
Overnight Eonia jumped to 0.343 percent on Friday
from 0.300 percent the previous day.
Euribor rates are fixed daily by the Banking Federation of
the European Union (FBE) shortly after 1000 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 = 0.7353 euros)
(Reporting by Eva Taylor)