After hitting an overnight high of 1.36, the Euro has steadily declined overnight. The reason: a dramatic and unexpected spike in borrowings under the ECB's Marginal (and Punitive) Lending Facility. Over €15.8 billion was borrowed under the facility, the highest since June 2009, and a surge from yesterday's €1.2 billion. With a rate of 1.75%, there is nothing cool or fun about borrowing from the MLF, which is seen just as stigmatizing as borrowing from the Discount Window back when US banks didn't have trillions in excess reserves, and discount window borrowings actually mattered. The WSJ provides some perspectives for the surge: "The ECB declined to give any explanation for the high figure, which generally reflects acute, if mostly short-lived, liquidity problems at one or more banks. Use of the facility had been minimal at the start of the year, but had risen to around a daily average of over €700 million in the past week. The rise in the use of marginal lending by the ECB is all the more surprising as there were no generalized signs of stress in the money market Wednesday. The benchmark overnight rate for euros, Eonia, eased to 0.7% from 0.749% on Tuesday, its lowest fixing in more than a week." According to some traders the spike has to do with a technical error, or the failure of a bank to request enough cash during normal liquidity providing operation, but a €15 billion oversight is just too big. Perhaps one should look at the fresh all time record Portuguese 10 year bond yield for clues why this has happened. Should the MLF lending spike tomorrow as well, someone will have to answer questions.