MNI BRIEF: ECB Remains Attentive To Collateral Scarcity- Lane

Early indications suggest that the European Central Bank’s decision last week to temporarily remove the zero percent interest rate ceiling for remunerating government deposits held with the Eurosystem has been effective, ECB chief economist Philip Lane said in a speech Wednesday, but he added that money market spreads and collateral scarcity remain concerns.

“The temporary change in the remuneration ceiling for government deposits gives government deposit holders extra time to undertake a smooth and gradual return of their deposits to the market,” Lane said, “Encouraging market intermediation of these deposits remains desirable in the long term.”

"At the same time, as the change in the ceiling for the remuneration of governments will only come into effect today, the full effects of the measure may only become visible over time, and we remain attentive to the spread between different money market rates as well as collateral scarcity concerns.