The price of ELA...

yoganmahew · February 11, 2011, 10:57pm

ftalphaville.ft.com/blog/2011/02 … bly-cheap/

Ireland’s secret liquidity is unbelievably cheap
Posted by Joseph Cotterill on Feb 08 16:33.

This, from the Irish Independent, is very interesting:
IRISH banks are paying an interest rate of less than 3pc on the €51bn of ‘emergency liquidity assistance’ (ELA) that has been sanctioned for them by the Central Bank of Ireland.
Several informed sources confirmed the interest rate in recent days, and also revealed that the ELA is typically for a maximum term of seven days…

Banks that run short of liquidity within a seven-day period are also allowed to go to the Central Bank of Ireland and ask for overnight money to tide them over.

The interest rate paid by Irish banks on ELA is in the “ball park” of 2pc-3pc, informed sources said. The rate is based on the ECB’s marginal lending facility of 1.75pc, plus a “penalty” reflecting the emergency nature of the aid.
This is cheap.

This is unbelievably cheap.

While it may be cheap by other bailout standards, when you have a tracker book that is generating 2-3% before costs, it is life support. I was expecting it to be at just the marginal lending rate (1.75%).

Anyway, it feeds into the collateral being valued at “how much do you need it to be worth”. We also have the “how much can you pay for it”…

What_Goes_Up · February 12, 2011, 12:15am

We can surely only be months away from these muppets being told to get the fuck out of the Euro and print your own toilet paper?

BoyRacer · February 12, 2011, 1:00am

We effectively are out of the Euro, well the local banks are anyway. For Mr. Honohans reference the following ten companies are the major players in the commercial printing of banknotes in case he needs to ring around for some quotes. He should also note the Icelandic central bank had to find another printer after the British government pressured De LaRue to stop printing ISK.

Giesecke & Devrient(Germany). (printed the Zimbabwe notes during their recent hyperinflation)
Orell Fussli Security Print Ltd. (Switzerland),
Bundesdruckerei Banknote GMBH (Germany),
De La Rue Currency (UK),
Francois Charles Oberthur Fiduciaire (France),
Joh Enschede Banknotes (Holland),
South African Banknotes Company,
Austrian Note Printing Company (Austria)
Canadian Banknote Printing Company,
Note Printing Australia Ltd.