Europe’s Repo Market Yet to Be Properly Tested, ECB Says
- Excess liquidity remains vast despite TLTRO repayments, QT
- ECB sees tentative signs of a transformation in cash markets
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The repo market’s capacity to provide liquidity in the euro area has yet to be properly tested, as the region still counts on trillions of euros in excess cash, according to the European Central Bank.
The central bank staff wrote in a blog post on Tuesday that there are signs a “transformation” is underway in Europe’s cash management system, but excess liquidity above €3 trillion ($3.3 trillion) still limits the need for alternative sources of funding.