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MNI INTERVIEW: ECB Bill Sales Would Ease Collateral Drought

(MNI) Brussels

The ECB is likely looking at ways to avert a year-end collateral squeeze, ICMA's Andy Hill says.

The European Central Bank might issue bills to ease the collateral shortage facing eurozone money markets at the end of this year, a senior director at a bond industry trade association told MNI, adding that last week’s EUR100 billion increase in the ECB’s Securities Lending programme will bring only marginal improvements.

The increase in the securities lending limit to EUR250 billion still leaves the facility very small in comparison to the size of the Eurosystem’s balance sheet, which holds a high proportion of the eurozone’s high-quality assets, said Andy Hill, who oversees repos and collateral as a senior director at the International Capital Markets Association.

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The European Central Bank might issue bills to ease the collateral shortage facing eurozone money markets at the end of this year, a senior director at a bond industry trade association told MNI, adding that last week’s EUR100 billion increase in the ECB’s Securities Lending programme will bring only marginal improvements.

The increase in the securities lending limit to EUR250 billion still leaves the facility very small in comparison to the size of the Eurosystem’s balance sheet, which holds a high proportion of the eurozone’s high-quality assets, said Andy Hill, who oversees repos and collateral as a senior director at the International Capital Markets Association.

Keep reading...Show less