Germany has paid a negative return to investors at a debt auction for the first time, highlighting the status of Europe's biggest economy as a safe haven for investors in the current debt crisis.
The Bundesbank, which handles German federal debt auctions, said in a statement it sold €3.9 billion of six-month Treasury bills at an average yield - the return earned by the investor - of minus 0.0122%.
Negative yields effectively mean that investors are willing to pay the German government to take their money.
There was strong demand for the issue, with investors submitting a total €7.08 billion in bids for the €4 billion in bonds on offer.
ECB doubles government bond buys
The European Central Bank said today that it more than doubled its weekly purchases of euro zone bonds, part of a programme aimed at driving down borrowing costs and fighting the debt crisis.
The ECB said it bought €1.1 billion in bonds last week, up from €462m the previous week.
Nevertheless, the volume remains modest compared with amounts purchased last summer: in August, the ECB bought as much as €22 billion worth of bonds in a single week. The ECB, as usual, did not specify which government bonds it had bought.
The bank has now bought a total €213 billion in euro zone government bonds since it first began the controversial operations in 2010 as part of efforts to ease debt strains in the 17-nation euro area.
It resumed big bond buys in August when renewed strains pushed Italian and Spanish borrowing rates to unsustainable levels, but purchases have dropped sharply in the past two weeks.
Several European governments have put pressure on the ECB to step up its programme of buying bonds, seen by some as a possible solution to the debt crisis. But the ECB, backed by Germany, has steadfastly refused, arguing that its sole responsibility is to keep euro zone prices stable. ECB chief Mario Draghi has repeatedly insisted that the programme of buying up the sovereign bonds of debt-wracked countries is limited and temporary.
Banks park new record amount with ECB
Banks' deposits with the European Central Bank have hit yet another new record, data showed today, a possible sign of ongoing tensions in the financial system despite unprecedented injections of liquidity.
Banks put €463.6 billion on deposit for 24 hours at the ECB overnight on Sunday, beating the previous record of €455 billion set last week.
Rising levels of deposits at the ECB bank are seen as a sign of market tension, since the money deposited earns interest of 0.25%, much less than the rate available on the interbank market. Thus, heavy use of the facility suggests banks favour parking the money at low interest with the ECB rather than lending it to each other.
The phenomenon appears particularly significant because it comes after euro zone banks borrowed a nearly half a trillion euros from the ECB last month in a brand-new three-year lending facility.
The ECB agreed to loan a record €489.2 billion to 532 banks at the end of last year in the longest-ever refinancing operation in a move to avert a possible credit crunch.
Commission completes €3 billion bond auction
The European Commission says it has completed a successful bond auction to raise €3 billion which will go towards the bail-out programmes of Ireland and Portugal.
The bonds sold have a maturity of 30 years, the first such bonds to be sold at auction. This is part of the deal to reduce costs for bail-out countries as agreed at a summit of EU leaders last July.
The €3 billion bond matures on April 4 2042, and pays an interest coupon of 3.75%. A statement by the Commission said the sale was completed within two hours, and was oversubscribed by €2.2 billion.
