I ‘ve been rather silent on the ECB weekly statements for the past weeks since the released data pointed to lower stress in the Euro money markets. Still, an increase in ‘ Other claims on euro area credit institutions denominated in euro’ during October cannot go unnoticed:


The ‘Other claims’ accounting record is the placeholder for ELA as well as for reverse repo operations by the ECB. The latter are matched by ‘Other liabilities to euro area credit institutions denominated in euro’ which do not seem to have changed much in the relevant period. During the last few weeks, ‘Other Claims’ have grown by €21.05bn while MRO lending dropped €19.16bn. Although monetary liabilities to credit institutions (current accounts, deposit facility, fixed-term deposits) have dropped €40.25bn pointing to substantial easing in financial stress, the increase of ‘Other Claims’ most probably means that certain NCBs (with Greece and Cyprus as the most likely candidates) have increased ELA financing of their domestic credit institutions. More data will be available as soon as October balance sheets are released.

The fact that German Bundesbank Target2 claims registered at €719.35bn in October, up €23.89bn from the September €695.46bn figure (which was the first time in months when Target2 claims actually dropped) could be related.