European Banks Close 2011 With Near Record Cash On Deposit At ECB, €9 Billion Overnight Increase

In the last daily update of 2011, the ECB announced that European banks saw their usage of the central bank's deposit facility rise yet again following a modest drop the day before to fund some Italian bond purchases, and increased to just shy of the all tie record of 452 billion, at 446 billion, a 9 billion increase overnight. And while this is obviously not a seasonal pattern based on historical observations, nor is it banks holding their cash for 2012 auction use, as the carry opportunities are already there with the BTP back over 7% (although LCH still has to get the memo), we look forward to the first update of 2012 to see just how much more this non-seasonal expansion will rise by. One thing is certain: when the next, February 29, LTRO is conducted, European banks will park about 700 billion with the ECB in the biggest circle jerk ever conceived in modern monetary history.