Wednesday, March 7, 2012

ECB's "Other Assets"

While most are focused on LTRO, an operation governed (mainly) by the ECB's "Single List" subject to generally standardized rules, another item on the ECB's balance sheet gets less attention. The ECB's definition of "Other Assets" is rather opaque and can be found here (, but its recent growth is likely due to the ECB's Emergency Liquidity Assistance (ELA) program. In its last weekly financial statement the ECB disclosed that "Other Assets" had grown by over 46 billion euros. This might have something to do with the ECB no longer accepting Greek sovereign bonds as collateral via its normal monetary policy operations see here ( Instead the Greek NCB probably shifted these loans and the collateral backing them into its "sundry/other assets" item prompting a corresponding adjustment on the ECB's Eurosystem balance sheet. But the increased usage of the Emergency Liquidity Assistance raises a number of questions -- for instance, what is the value of collateral held against Emergency Liquidity Assistance credit lent to banks in Greece & Ireland?

Another thought - since the 46 billion most likely came from the ECB's "Longer term refinancing operations" or perhaps its "Main refinancing operations" this impacts the calculation of liquidity added by the February 3-year LTRO which has been estimated at 311 billion ( - but taking this shift of Greek sovereign collateral into effect the net new funding from the three year is probably be closer to 357 billion.

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