The European Central Bank is coming under pressure from bankers to lend more of its stash of German government bonds to avert a market squeeze that would undo some of its own stimulus efforts.
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Having drained the markets with its multi-trillion-euro debt-buying programmes, the ECB has left fewer bonds sitting on dealers’ balance sheet and available to be borrowed on the repo market.
Investors are currently paying 0.99% to borrow German bonds against cash for two months, implying a 7% rate for bonds lent on Dec. 31 for the following Monday, data on Refinitiv Eikon shows. Borrowing the debt for two months cost 0.6% two months ago.
The full article is available at https://www.reuters.com/markets/europe/ecb-faces-pressure-unlock-bonds-avert-market-squeeze-2021-11-25/