Central Bank emergency lending soars to €44.67bn

A follow up from myself and Lorcan’s post last month on how much liquidity the Irish Central Bank is providing to Irish banks. November data has just been released and the figures are stark, a jump from €34bn in October to €44.67bn in November:

Of course that’s not the only story. Lending to euro area credit institutions rose as well, from €130bn to €136bn. As Lorcan points out on his blog:

Firstly, banks other than Anglo are now accessing this facility – Total loans from Anglo destined for NAMA were €20bn

Secondly, the ECB is NOT accepting NAMA promissory notes as collateral for repo operations. If it was, there would be no need for this facility from the Irish central bank. Presumably, the fact that NAMA is paying with promissory notes (basically an IOU) rather than government guaranteed bonds means they are not repo-able.

So, what does all this mean?

Well, the first broad point is that the amount of liquidity – both ECB and ‘exceptional’ – being provided to the Irish banking system has reached utterly unsustainable levels. At a combined total of €181.110bn, current ‘extend and pretend’ policies must be close to their limit.