4 Jan 2012

And the replies from the ECB to the 10 questions

Well, I certainly can't complain about the swiftness of the response from the nice person at the ECB info desk to my 10 questions this morning. Looks like we'll need to get the journalists at Bloomberg on the job if we want to know who the 523 banks were that took the 489 billion, and whether or not any of them got turned down. Frankly, I doubt it, since the decisions were apparently made the following day.

Anyway, here are the replies to the 10 questions. Thank you ECB....
---------------------------- Original Message ----------------------------
Subject: RE: 10 questions forMario Draghi and the ECB
From:    info@ecb.int
Date:    Wed, January 4, 2012 12:48
To:      Simon Thorpe

Dear Mr Thorpe,

Please see below our answers.

1) Where can I find a list of the banks to which the ECB provided money?
The identity of the banks participating in the Eurosystem's credit (and other monetary policy) operations is covered by confidentiality and therefore not publicly available. It is analogue to the relationship between commercial banks and their customers.

2) Where can I find a list of the amounts of money provided for each bank?
Same as above.

3) What percentage of the applications were funded in full?
Under the current policy of the ECB's Governing Council, credit operations are conducted with what we call "full allotment", which means that the restriction on (solvent) banks' possibility to borrow is determined by the bank's possession of eligible collateral that has to be posted against all credits from the central bank.

4) How long did it take the ECB to decide whether to provide funds to a given bank?
The Eurosystem has a list of eligible counterparties, based on criteria that are published here: (Chapter 2 in Annex 1 of the guideline)
All banks that are eligible according to the criteria can participate in the monetary policy operations

5) What checks are made on the suitability of a bank before consenting to make such a loan?
Same as under 4)

6) Was there any limit on the total amount of money that could be provided via this mechanism?
Same as under 3)

7) If not, does this mean that the ECB could print an arbitrarilly large amount of money?
Indeed, according to the Treaty on the functioning of the European Union (Protocol No. 4) the ECB (or, more accurately: the Eurosystem) has the competence to "conduct credit operations with credit institutions and other market participants, with lending being based on adequate collateral." Please see Article 18 here

8) Was any money provided to "publicly owned credit institutions" as stated by paragraph 2 of Article 123 of the Lisbon treaty?
Same as under 1) and 2)

9) If such a publicly owned credit institution was to supply the money to
a government such as the Greek government in order for that government to
pay off its debts to the financial markets, would the ECB object?
According to the Treaty - as you have just quoted - such publicly owned credit institutions "shall be given the same treatment by national central banks and the ECB as private credit institutions." It is up to the banks to decide how to use the money they have borrowed from the central bank system. 

10) Has Mario Draghi read Michel Rocard and Pierre Larrouturous tribune in
Le Monde on the 2nd of January entitled "Pourquoi faut-il que les Etatspayent 600 fois plus que les banques".
You can be assured that Mr. Draghi is very well informed of all pertinent proposals and ideas that are discussed in the public domain and among monetary policy experts.

With kind regards,

Directorate Communications
Press and Information Division
Kaiserstraße 29
D-60311 Frankfurt am Main
Tel: +49 69 13 44 74 55
Fax: +49 69 13 44 74 04
E-mail: info@ecb.europa.eu

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