Italian elections loom large so fearsome banks hold onto liquidity
The markets were left scratching their heads a little this morning after discovering that the total cash repaid by banks who participated in the ECB’s first three-year Long Term Refinancing Operation (LTRO) was only EUR 61 billion, compared with market estimates that ranged from EUR 100bn to EUR 150bn. What did this mean? On the one hand, maybe banks decided to hang onto this long-term liquidity as a “Berlusconi hedge” against Bunga Bunga doing surprisingly well in this weekend’s elections.
