Tuesday, January 21, 2014

Eurozone's Overnight Eonia Rate Spiked Recently, Is Bank Liquidity Risk Rising In The "Core" Eurozone?

The Eonia® rate, or the "Euro OverNight Index Average," rose to 0.359% yesterday from just under 0.12% in early January (according to the chart below). At euribor-ebf.eu, the Eonia rate is defined as "the effective overnight reference rate for the euro. It is computed as a weighted average of all overnight unsecured lending transactions in the interbank market, undertaken in the European Union and European Free Trade Association (EFTA) countries."

According to WSJ's Real Time Economics, "Christian Schulz, an analyst with Berenberg Bank in London, notes that the increase in Eonia is likely driven by banks in the “core” euro zone, as banking systems in the stressed periphery tend to rely more on the ECB for funding anyway."

Interesting, so is liquidity risk rising at those banks? Check out the charts via http://www.euribor-ebf.eu/euribor-eonia-org/eonia-rates.html.


Source: http://www.euribor-ebf.eu/euribor-eonia-org/eonia-rates.html

Source: http://www.euribor-ebf.eu/euribor-eonia-org/eonia-rates.html

Source: http://www.euribor-ebf.eu/euribor-eonia-org/eonia-rates.html

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