Use of the European Central Bank's overnight deposit facility reached a new, all-time high Friday, reflecting ongoing tension in interbank lending markets and a surfeit of liquidity in the financial system.
Euro-zone banks parked €463.565 billion ($589.61 billion) in the overnight deposit facility Friday, compared with €455.299 billion parked overnight Thursday, ECB data showed Monday.
The overnight deposit level has been elevated since August 2011, as banks favor using the ECB as a safe haven for excess cash rather than lend it out to other banks. In past weeks, use of the facility has repeatedly reached new all-time highs, after the ECB in December flooded the market with liquidity in the form of nearly half a trillion euros in long-term loans.
Banks are increasingly reluctant to lend to other financial institutions due to concerns about their counterparties' exposure to risky euro-zone sovereign debt.
Meanwhile, banks borrowed €1.391 billion from the ECB's overnight lending facility Friday, compared to €1.861 billion borrowed Thursday.
When the interbank market works properly, banks use the lending facility to borrow just a few hundred million euros overnight. But many banks are at present forced to turn to the ECB for their short-term funding needs as the debt and banking crisis continues to erode their confidence in one another.
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