FRBNY Swap Update

CalibratedConfidence's picture

Zerohedge pointed out again today in its continuing series on the Fed's direct bailout of Europe (the one Senator Corker told the American public Bernanke was not going to be involved in during a closed door meeting) that the Fed injected $99.3 billion into European Banks.  A key focus for moves such as this aside from the H.8 is the FRBNY FX Liquidity Swap facility.  Just this past week a near doubling of the amount to the ECB coincides with the Fed's non involvement with the direct bailout of European banks from $4,192 million to $8,343 million.

 

Levels of the ECB's over-night deposits at their facility have continued to drop since July of 2012.  This facility contains volumes in EUR millions for 1) open market operations; 2) recourse to the marginal lending facility; 3) use of the deposit facility; 4) autonomous liquidity factors; 5) current account holdings; and 6) reserve requirements:

Looking at the levels of the ECB's allotment amount in their main refinancing ops which allow for the smooth fulfillment of reserve requirements, we can see the sharp increase after July 2012, the same time Deposit Facility levels were cut: 

As was hypothesized in the aforemention Zerohedge post:

It is also unknown is the Fed's reserves, reappearing as cash, and then
siphoned over to European bank HoldCo via payables, is then used by,
say, Italian and Spanish banks to purchase BTPs and Bonos, and give the
impression that all is well. Because unlike before, keeping the EURUSD
high is not as critical any more. But what is critical is to give the
impression that Italian and Spanish sovereign risk is contained. And
after all, let's not forget that as of January, Italian bank holdings of
Italy state bonds just hit a record of EUR200 billion.