FRANKFURT (Reuters) - Banks took no money from the European Central Bank’s overnight facility on Wednesday for the first time in a year and a half, data from the ECB showed on Thursday.
Banks are usually reluctant to use the ECB’s instant access facility - also known as its ‘emergency’ window - because it charges 0.75 percentage points more interest than normal ECB funding, and overnight borrowing has been low since the start of the year.
On Wednesday, no bank took any money from the ECB and the overnight loan facility stood at zero for the first time since August 28, 2011, the ECB data showed.
“This is just a coincidence. There is no rational matter behind this,” said a money market trader who declined to be named, noting that overnight borrowing had been low for weeks.
While it is too early to identify a trend, continuous low borrowing from the ECB could be an indication that stress in the interbank market is easing and banks can get funding more easily elsewhere rather than having to turn to the central bank.
The ECB Governing Council will discuss interest rates at its policy meeting on Thursday and a Reuters ECB poll showed that the majority of economists expects no change in the main refinancing rate.
Reporting by Eva Kuehnen