Or the part where we explain how disappearing liquidity tightens the Eurozone money market, and if and when things will get better. According to daily liquidity conditions data, since March 18, the date of the first emergency LTRO settlement, excess liquidity has increased by 276 billion euros. That’s nearly equal to the increase in the stock of outstanding (T)LTROs during this period. One would have expected a much bigger increase in excess liquidity. After all, the ECB bought 138 billion euros of bonds since it ramped up QE after the March 12 Governing Council meeting. That begs the question: where does the liquidity the ECB creates with bond buying end up? In so-called autonomous factors.

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