16.5 billion euros week 1

[Beet]

LONDON (MarketWatch) -- The European Central Bank announced Monday it would launch a special tender to re-absorb the 16.5 billion euros ($21 billion) in extra liquidity produced by its purchases of euro-zone government bonds.

Economists said the snap announcement appeared designed in part to soothe concerns that the ECB was moving towards a money-creating, quantitative-easing strategy. ECB officials have insisted that the program of bond purchases, announced last week in the wake of the nearly $1 trillion European Union-IMF bailout program for the euro zone announced last week, would be fully sterilized.

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http://www.marketwatch.com/story/ecb-to-mop-up-21-billion-from-govt-bond-buys-2010-05-17?reflink=MW_news_stmp

QE is exactly what is needed right now. The 16.5 billion euros amounts to $21 billion. Less than 2% of outstanding sovereign debt of at risk PIIGS. In contrast, in March 2009, the US Fed revealed plans to purchase over $1 trillion in bonds (sterilized, of course).

[Torie]

What does "fully sterilized" mean in this context, and how does it work? That is new one for me.

[Beet]

What does "fully sterilized" mean in this context, and how does it work? That is new one for me.

In the Fed context, the central bank paid interest rates for banks to keep very short term reserves loans at their Fed accounts, effectively taking that money out of the monetary base. In the ECB context, they are issuing "tender", which I assume is something similar to that or to normal Federal open market operations where the central bank sells official bonds in exchange for currency.

Anyway, it appears that I jumped the gun on the thread title; this figure is only preliminary for the last week, so there is more coming.

[Torie]

What does "fully sterilized" mean in this context, and how does it work? That is new one for me.

In the Fed context, the central bank paid interest rates for banks to keep very short term reserves loans at their Fed accounts, effectively taking that money out of the monetary base. In the ECB context, they are issuing "tender", which I assume is something similar to that or to normal Federal open market operations where the central bank sells official bonds in exchange for currency.

Anyway, it appears that I jumped the gun on the thread title; this figure is only preliminary for the last week, so there is more coming.

IC, it is like burning currency in the fireplace, except that of course it can come back to life.

[Beet]

What does "fully sterilized" mean in this context, and how does it work? That is new one for me.

In the Fed context, the central bank paid interest rates for banks to keep very short term reserves loans at their Fed accounts, effectively taking that money out of the monetary base. In the ECB context, they are issuing "tender", which I assume is something similar to that or to normal Federal open market operations where the central bank sells official bonds in exchange for currency.

Anyway, it appears that I jumped the gun on the thread title; this figure is only preliminary for the last week, so there is more coming.

IC, it is like burning currency in the fireplace, except that of course it can come back to life.

And the response of the currency markets thus far is like a Jay Sean song.

[opebo]

How can they possibly expect to improve their economy without quantitative easing?  They seem to be living in a fantasy.