Aggressive ECB has been making sure banks have unlimited liquidity

The perception is the European Central Bank has been an outstanding laggard in its policy responses, that it lacks a clear mandate, and has too many people (22) sitting on its governing board to be aggressive.

How then to explain what they did on 23rd June? In an unprecedented single-step easing of monetary policy, they conducted a one-year repo where banks could bring a very wide range of assets and deposit them with the ECB for a year in return for cash at just 1% a year, for e442bn. That is 10% of the eurozone’s narrow money supply in one day, or e1,300 per eurozone citizen. 1,100 banks benefited from this largesse. Effectively but quietly, the ECB has been flooding the system with liquidity from the onset of the crisis. Its balance sheet is actually now bigger as a proportion of eurozon...