Euro zone banks deposited the biggest amount of overnight funds at the ECB so far this year yesterday, in a signal that banks remain wary of lending to each other.
Banks put €313.76 billion on deposit for 24 hours at the European Central Bank. That is highest amount so far this year and comes despite coordinated action by the world's leading central banks earlier this week to calm tensions in the crucial interbank lending market.
On Wednesday, the central banks of the euro zone, Canada, Britain, Japan, US and Switzerland said in a joint statement they would lend dollars to commercial banks that might be finding it hard to borrow them directly from other banks.
The level of deposits at the ECB bank is an indicator of the reluctance of banks to lend to each other on the pivotal interbank market. The money deposited earns an interest rate of 0.5%, which is less than the rate available on the interbank market.
Banks become reluctant to lend to each other notably when they are concerned about the capacity of the borrower to repay the loan.
