Eurosystem liquidity

The euro crisis has revealed a strong interdependence between banks and sovereigns. Banks located in the weaker countries due to the exposure to “their” governments and economies have been experiencing difficulties financing themselves on the market and have instead resorted to the liquidity provided by the Eurosystem.

In this dataset, we provide a breakdown of the Eurosystem refinancing operations across countries and LTRO/MRO. While the ECB publishes the total numbers for the euro area, the breakdown across countries is to date not centrally available. We compile the data from the different national central banks. The relative shares of liquidity provided to banks in different countries has changed over the last two years and the increasing dependence of banks on ECB liquidity in weak countries in clearly visible.

A comparison with the Bruegel dataset of sovereign bond holdings suggests that the increased borrowing of Eurosystem liquidity by domestic banks has been to some extent used to buy government bonds.