ECB conducts liquidity providing fine-tuning operation

On Monday, March 10, the European Central Bank (ECB) announced the weekly Main Refinancing Operation (MRO) through which the Eurosystem injects liquidity with a standard maturity of seven days into the euro area money market. This operation attracted bids for €260.4 billion from euro area eligible counterparties, with the ECB allotting €209.5 billion, or 80.45 per cent of the total amount bid for. The marginal rate, which is the rate at which the total tender allotment is exhausted, was set by the ECB at 4.12 per cent, one basis point higher than that of the previous week.

The following day, the ECB also announced a liquidity-providing fine-tuning operation through which it was prepared to inject funds on an overnight basis in order to satisfy imbalances that had accumulated by the end of the preceding maintenance period in respect of the reserve deposits that credit institutions in the euro area are obliged to hold with Eurosystem central banks. This operation attracted bids for €45 billion from euro area eligible counterparties, with the ECB allotting €9 billion, or 20 per cent of the total amount bid for. The marginal rate was set by the ECB at 4.13 per cent. The previous ECB fine-tuning operation, held on February 12, had been a liquidity-absorbing operation which was conducted at a fixed rate of four per cent.

That day the ECB also announced another supplementary Long Term Refinancing Operation (LTRO) through which the ECB provides liquidity for a maturity of three months. This operation was aimed at further consolidating the progress made so far in the normalisation of the euro money markets. It attracted bids for €132.6 billion from euro area eligible counterparties, with the ECB allotting €60 billion, or 45.25 per cent of the total amount bid for. The marginal rate on funds provided through this operation was set at 4.25 per cent, nine basis points higher than the rate on the last monthly LTRO, held at the end of last month.

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on June 13. Out of the €19.4 million worth of bids submitted, the Treasury accepted bids for €4.4 million. Given that no bills matured during the week, the outstanding balance of Treasury bills rose to €359.9 million.

The yield resulting from the auction was 4.173 per cent, 4.2 basis points higher than that on bills with a similar tenor issued on February 22. The latest yield represented a bid price of 98.9562 per 100 nominal.

Today the Treasury will invite tenders for 183-day bills maturing on September 19.

Treasury bill trading on the Malta Stock Exchange amounted to €2.8 million during the week, with all trades being conducted by the Bank in its role as market maker. No transactions were conducted off-exchange.