Thursday, September 15, 2011

ECB Balance Sheet Bleg

Like a lot of people I'm trying to figure out how scared to be about the European debt situation. The main potential fear is obviously a banking crisis triggered by write-downs of Greek and possibly other peripheral sovereign debt. To that end, I've been poking around the ECB website trying to understand how much the European Central Bank (ECB) is lending to euro-area banks (as a sign of stress that they can't borrow from each other).  It's immediately obvious that the ECB balance sheet is an arcane and specialized area of knowledge and in one morning I'm not getting to an adequate state of understanding to really know what I'm looking at.

But - I figure somewhere in the larger blogosphere is someone who knows! So if you know who that person is, point me in their direction.

In the meantime I've found three series that seem from their description to be about lending by the ECB to banks.  Up top is "Lending to euro area credit institutions related to MPOs denominated in euro" which shows a suitably massive spike at the time of the 2008 crisis another spike in mid 2010 and a milder run-up more recently.

Next is "Other claims on euro area credit institutions denominated in euro":

That also shows panic in 2008 (and some weird outlier in 2002) a peak in mid 2010 and then even more escalating usage recently.

Next is "Other Liquidity Providing Operations":

Apparently some parties needed a lot of liquidity in late 2009, even more in 2010, which they didn't give back, and now there is another spike in demand for it.  Note the scale of this graph is significantly less than the one up top however (all units are millions of euros).

Finally, here is the overall size of the ECB balance sheet:

This looks vaguely similar to the situation at the US Fed where the balance sheet had to be massively expanded to cope with the 2008 crisis and it has not yet been possible to return it to normal.  However, at least it hasn't got a whole lot bigger again this year (so far).

If anyone can shed more light on the exact meaning of these series or what else to look at I'd be grateful.


rjs said...

you could try rebecca wilder:

Kenneth D. Worth said...

Regarding the European debt crisis, I could certainly be wrong, but regardless of the size of the numbers, I don't think it will have the same impact as the US mortgage crisis. The US economy was crushed by falling home prices (and an enormous negative wealth effect) and a move from negative savings rates to significantly positive savings rates by consumers dramatically reducing spending.

The situation in Europe seems much more akin to the Latin American lending crisis and/or S&L crisis of the 1990's. Some bank shareholders and bondholders will lose money. But where's the impact on the broader economy?

rjs said...

ECB Says Banks' Emergency Borrowing Jumped to Highest in Month

Read more:

peakorlando said...

Edward Harrison at Credit Writedowns?

rjs said...

stuart, i recvd an email response from rebecca re your bleg here:

"If he contacts me, I'll help in any way that I can. Yes, the ECB website AND balance sheet is very arcane and quite opaque."

& ed harrison knows the euro-area politics as well as anyone, which arguably may be more important than the monetary data sets at this point in time...

Stuart Staniford said...

Thanks rjs - I'll likely do that once I have a chance to formulate my questions.