Thursday, August 18, 2011

ECB "Writes the Check"

ECB website reports (finally) that they have recently purchased about E22B of securities under their Securities Markets Program.

See Line Item 7.1 in the ECB Balance Sheet here.

"The holdings by the Eurosystem of securities held for monetary policy purposes (asset item 7.1) increased by EUR 22.0 billion to EUR 155.7 billion. This increase was due to settled purchases under the Securities Markets Programme. Therefore, in the week ending 12 August 2011 the value of accumulated purchases under the Securities Markets Programme and that of the portfolio held under the covered bond purchase programme totalled EUR 96.0 billion and EUR 59.7 billion respectively. Both portfolios are accounted for on a held-to-maturity basis. (Ed: Must be nice!)"

Total purchases under this program were at about a E74B level for quite some time. Now it looks like the ECB has added to its portfolio another E22B in securities.

Somewhat related: The Fed has apparently also recently provided $500M to a single European Institution via the USD swap lines. Apparently, systemic external USD liquidity problems can occur at a single institution.

Viva la "Free Market"!


Mario said...

"Both portfolios are accounted for on a held-to-maturity basis."

what does that mean exactly? They are holding the bonds until maturity?

I'm really starting to get pissed off with this whole forex swap line with the Fed. WTF man!!!

Ramanan has a point about the Fed being its own entity

Matt Franko said...


I think usually, if you say that you are holding a bond to maturity, the regulators let you carry it at book, even though the market value of the security may have fallen.

This is a CB anyway so it is different as the ECB more or less can do anything it wants. One reason I highlighted it was that it is basically absurd for a CB to even be concerned about such issues. The concern about "held to maturity" would definitely apply to member institutions, but it may give the wrong impression about a CB...


btw I looked at the US govts net spending (fiscal flow) for the 5 statement days ending yesterday (Weds) and they seem to be back on: $36B net for the 5 days, if you base a month on 20 statement days, that is a flow of over $130B/mo, much higher than when we were at debt ceiling, the "soft spot" may have ended as Geithner may be opening the spigot to wide open...

Mario said...

ahh I see. Yes rather funny for the CB to do that. I mean the whole point of them purchasing them is b/c of the fact that their market value is so terrible, so who do they think they are "fooling" anyway!?!? LOL

That's great news to hear about the spending. These politicians are weird folks man. Weird.