Emergency lending from the central bank of Europe reached the highest level in more than a year and a half, although analysts believe the spike could be the result of an error, according to Financial Times. On Friday, the European Central Bank showed that borrowing through the emergency lending facility used largely by banks in difficulty rose to €16 billion on Thursday, which is the most since June 2009. Lending was seen at €15.8 the previous day, although the day before that borrowing was only €1.2 million.
Don Smith at Icap called the spike “an unusual event,” and noted, “There is absolutely no sense of panic, which suggests that this is probably a dealer error.” The current level of lending is far above the daily average so far this year of just €100 million. Laurent Fransolet of Barclays Capital offered another possible explanation, suggesting that a bank that relied on the ECB for funding switched its source of liquidity to the emergency facility in a move engineered by the central bank. The ECB declined to comment.
