Thursday, October 9, 2008

ECB Liquidity Changes

I noticed something in a news item that I read today that I thought I'd share.

While the big news is focused on the coordinated drop in central bank rates, the ECB did something else. They also eliminated their auction system. No, no, they haven't stopped providing liquidity, they are just doing it a different way than the standard auction process.

What now?

They are making unlimited amounts available at a fixed interest rate of 3.75 percent. Some other additional steps were taken too.

This sounds pretty interesting in the longer term, once the panic lifts.

Does anyone want to delve into figuring out what "unlimited funding" really means?

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