Full article & charts here:
– ECB Balance Sheet Plunged by €1.6 Trillion (-18%) from Peak. Bond Roll-Off Speeds Up:
Total assets on the ECB’s balance sheet as of June 30, which was released today, have plunged by €1.62 trillion, or by 18%, from the peak in June last year, to €7.22 trillion, the lowest level since March 2021.
The ECB had two major types of QE that are now unwinding: It offered free loans under very favorable conditions to banks, ultimately handing banks €2.22 trillion in cash to deploy. And it handed €4.96 trillion in cash at the peak to the bond market by purchasing government bonds, corporate bonds, and asset-backed securities.
In October, the ECB announced the first steps of QT, when it made the loan terms unattractive which caused the banks to pay back those loans, thereby removing liquidity via the banks. It later announced the initial steps on unwinding its bond holdings, which started in March. Since then, the ECB has unloaded them at a faster rate than announced.
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