Last week we showed how the most recent Irish Central Bank financial statement showed a large jump in the ‘other assets’ of the bank. We’ve been trying to figure out what exactly is going on. Over the weekend, Lorcan noticed that the data we used last week has since been updated to include the October data. It makes for eye-watering reading – hold onto your hats.
The ‘Other Assets’ of the Central Bank are now at €34.606bn, having jumped from €14.378bn in August and from the €21.195bn in September (which we reported last week). That’s a rise of over 140% from August to October. But what, on the face of it, is going on, and what does it mean?
Here is a chart of the ‘Other Assets’ of the Central Bank from the peak of the property bubble in September 2006 to October 2010:
Here is the table:
When previously contacted, the Central Bank of Ireland gave this description of what is captured by the ‘Other Assets’ column of the Irish Central bank balance sheet:
“The ‘Lending to euro area credit institutions in euro’ columns [including “main refinancing operations” and “longer term refinancing operations”] are Eurosystem operations.
Any other lending undertaken by the Central Bank is captured under the ‘Other Assets’ column, also in Table C2. It should be noted that this column is not exclusively lending, but also captures other certain assets of the Bank.
There is no further detailed information we can provide.
[The sheet being referred to is here, note the columns referred to (f) and (g), while other assets is column (r).]
So, what does this mean?
Well, the total amount of ‘assets’ in the Irish Central Bank has risen by a total of €55.3bn from August to October, from €130.310bn to €185.815bn . But only €35bn of that has been captured by the ECB-related columns in (f) and (g) referred to by the Central Bank above.
The other €20bn has been added to the ‘Other Assets’ column.
All of which seems to point to some euro quantitative easing happening on Dame Street in Dublin. How long will the ECB allow this situation continue?