14 Jul 2014
ECB balance sheet may rise above Fed's - RBS
FXStreet (Łódź) - Greg Gibbs, FX Trading Strategist RBS predicts that over the coming year, assuming the TLTRO outstanding rises further to nearer EUR700bn, the ECB balance sheet should again rise above that in the US, although it should remain well below the BoJ’s.
Key quotes
"A Bloomberg survey reported on Monday shows that the median of 22 analysts predicted that the ECB’s TLTRO four year fixed term loans will inject a total of EUR710bn into the European banking
system over 8 auctions to be held quarterly from 16-September this year, starting with EUR305 bn when the first tranche is auctioned in September (out of a maximum total possible of EUR400bn for the first two auctions)."
"These amounts compare to the current ECB balance sheet size of EUR2,070 bn in July. The balance sheet has been declining as banks repay their old LTRO loan taken out in2011/12."
"Presumably the balance sheet should soon rise again by a similar amount to the take up in these new TLTROs."
"As such, the survey suggests that the ECB’s balance sheet will rise by around 15% after the first round of TLTROs in September and continue to climb over the next two years."
Key quotes
"A Bloomberg survey reported on Monday shows that the median of 22 analysts predicted that the ECB’s TLTRO four year fixed term loans will inject a total of EUR710bn into the European banking
system over 8 auctions to be held quarterly from 16-September this year, starting with EUR305 bn when the first tranche is auctioned in September (out of a maximum total possible of EUR400bn for the first two auctions)."
"These amounts compare to the current ECB balance sheet size of EUR2,070 bn in July. The balance sheet has been declining as banks repay their old LTRO loan taken out in2011/12."
"Presumably the balance sheet should soon rise again by a similar amount to the take up in these new TLTROs."
"As such, the survey suggests that the ECB’s balance sheet will rise by around 15% after the first round of TLTROs in September and continue to climb over the next two years."