November 16, 2012 / 12:16 PM / in 5 years

UPDATE 1-Year-long fall in Euribor rates fades

(Updates with Libor fixing)
    FRANKFURT/LONDON, Nov 16 (Reuters) - Key Euribor
bank-to-bank lending rates remained steady on Friday, finding
fresh support after a year-long downtrend under the weight of
excess liquidity in the banking system. 
    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 they have been showing signs of stabilising this month
as the impact of the excess liquidity has been largely priced
in, and due to uncertainty about whether the ECB will cut
interest rates further.
    The ECB has maintained interest rates at a record low of
0.75 percent, and ECB President Mario Draghi, speaking after a
policy meeting last week, declined to comment when asked whether
markets were right to expect a cut next month. 
    Three-month Euribor rates, traditionally the
main gauge of unsecured bank-to-bank lending, were unchanged on
Friday at 0.191 percent. The three-month rate has begun to find
some support just below 0.2 percent this month.
    The equivalent Libor rate, fixed by a smaller
panel of banks in London, was 0.12643 percent, compared with
Thursday's 0.12571 percent.
    For other Libor rates see 
    The six-month rate dipped to 0.356 percent from 0.357
percent and the one-week rate was unchanged at
0.078 percent. The overnight Eonia rate inched up to
0.078 percent from 0.077 percent.
    Dollar-priced bank-to-bank Euribor lending rates
  were mixed, with three-month rates
rising to 0.61538 percent from 0.60077 percent and one-week
rates falling to 0.29846 percent from 0.30000 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
extremely high at about 666 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
cash overnight. 
    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 last Thursday, 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 
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($1 = 0.7867 euros)

 (Reporting by Frankfurt newsroom; Editing by Catherine Evans)
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