Financial Stability News

News about financial stability, central banking and theory of money

€680Bn LTRO Take Up?

Zero Hedge reports today that Goldman has conducted a poll among among banks and investors about their views on the next ECB long term funding operation coming up end of February. The consensus is for a substantial increase, close to 680 trillion euro. But, as the post notes, if the banks use this to exchange weak assets for cash in ECB deposits account, it is essential paying interest to retain mirage of solvency. Question is how long this process can go on? Perhaps, as ZH notes, until hedge funds start shorting all the banks taking money in the LTRO? Time will tell.


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