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2026-07-13 17:28:11
[ECB's Overnight Lending Facility Shows Dramatic Divergence: Borrowings Reach Only €150 Million, Deposits Exceed €2 Trillion] ⑴ Data released by the European Central Bank (ECB) on Monday showed that financial institutions borrowed only €150 million through the overnight lending facility, while deposits through the overnight deposit facility reached a staggering €203.756 billion. ⑵ The near-exhaustion of lending and the continued expansion of deposits create an extreme contrast, reflecting the still extremely abundant liquidity in the Eurozone banking system. Institutions are more inclined to deposit excess funds with the central bank to obtain risk-free returns. ⑶ Deposit facility usage remains above €2 trillion, indicating weak market demand for short-term financing. At the same time, risk appetite has not shown a significant recovery, and institutional fund allocation remains primarily defensive. ⑷ The near-absence of overnight lending further confirms the low willingness to lend in the interbank market, and there are no signs of substantial improvement in the momentum of credit expansion in the real sector. ⑸ If this extreme divergence continues, it may exacerbate market concerns about the efficiency of the transmission of financial conditions in the Eurozone. The focus going forward will be on whether the ECB will adjust the deposit facility rate to reduce the scale of excess reserves.
