Is This The Reason For EONIA's "Mystery" Surge?

'Mystery' solved... maybe.


Bloomberg is reporting that excess liquidity within Greek banks - who leant it to their credit-risky peers at notably high rates - are responsible for the sudden, scary spike in EONIA over the last two days, according to two bankers with knowledge of the matter.

Salaries that were deposited by Greek civil servants and higher receipts from repurchase agreements provided National Bank of Greece with more liquidity, the person said, asking not to be named because the matter is not public.


National Bank of Greece SA had excess liquidity of around 450 million euros ($536 million) this week, which it loaned to its peers in the country, the people said.


Other Greek banks found the rate offered by National Bank of Greece appealing, thus drawing on the cash, the people said.


While the flood of funds and the increase in interbank lending in Greece is good news, the rates at which borrowers from the country can access funds are still higher than for the rest of the continent, thus pushing up the weighted average of the overnight rates in Europe, one of the people said.

Today's fix at 1245ET printed at -29.1bps, 5bps lower than Thursday as 'pressure' seems to be relieving.


hooligan2009 Fri, 12/01/2017 - 13:36 Permalink

so... several trillion of credit derivatives across the entire EU banking sector is being repriced because of a few hundred million of dodgy greek banking transactions in athens?this is symptomatic of the pricing of illiquid securities, from bitcoin to AAPL to EONIA - the last trade for a pittance, determines the price for the other 99.8% of market cap THAT IS NOT TRADED and for which there is no bid or offer in size.hence a one BTC purchase that is 10% higher than the last price, lifts the whole market value of bitcoin by 10% - 10,000 bucks changes 21 billion in market value of all bitcoins1,000 shares of AAPL traded at 1 dollar lower than a 170 dollar share price, changes the value of the other 875 billion in market cap of AAPL.this makes price rigging, front running, bid or offer strength testing (via submarine orders) by algos the way to "game" the market - and cheat honesy injuns of opportunity to buy or sell at fair prices.solution = trades can only impact price by their weighted average against total market cap = end of market price rigging by pirates