Eurosystem gross lending to banks in euros rose by a further €7.1 billion last week to a record €1,339.5 billion, consistent with speculation that institutions in Greece and other peripheral countries are continuing to suffer an outflow of funding, necessitating increased borrowing from the ECB and national central banks.
The gross figure comprises “lending related to monetary policy operations” and “other claims”, under which the Greek and Irish “emergency liquidity assistance” (ELA) operations are recorded. The latter component rose by €4.1 billion last week, probably reflecting additional Greek ELA. This may have been related to last week’s announcement that some Greek banks had been temporarily shifted from regular lending (i.e. “related to monetary policy operations”) to ELA pending recapitalisation.
The switch, however, did not prevent a further €2.9 billion rise in regular loans last week, i.e. any reduction to the affected Greek banks was more than offset by an increase in lending to other institutions.
The suggestion is that that the ECB’s exposure to the periphery is continuing to mount, with a probable parallel rise in Bundesbank exposure to the ECB via TARGET2.