Heightened event risk as ECB excess liquidity shrinks


A rise in the forward euro overnight indexed average (Eonia) rate is reflecting fears banks might look to front-load reserves at the beginning of the European Central Bank's (ECB) new monthly maintenance period on July 14.

Excess liquidity in the market has been cut in half following the expiry of the ECB's 12-month longer-term refinancing operation (LTRO) on July 1. A research note from Société Générale dated July 2 estimated €167.7 billion of excess liquidity had evaporated after the settlemen

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