ECB Glitch Reduced Bank Deposits by More Than 400 Billion Euros
(Bloomberg) -- A glitch in the European Central Bank’s system for settling large-value payments by commercial and central banks has resulted in a drop in deposits worth more than 400 billion euros ($473 billions).
The interruption -- which occurred on Friday and lasted more than 11 hours -- meant large institutions were unable to move their cash in the usual way. The failure was illustrated in data published Tuesday by the ECB that shows a 416 billion-euro slump in the use of the deposit facility at the central bank.
The cash remained in banks’ current accounts, and the balances have since returned to normal. Still, the incident highlights the critical role of the payments infrastructure for the euro area, and the risks that could be posed from a longer outage.
The ECB said the disruption “was due to the technical issues with TARGET2 on Friday, which led to difficulties for banks and central banks to settle and determine the account balance.”
Target2 is used to process more than 2 billion euros of transactions per minute. A long-enough halt to that flow of liquidity would start to have real-world effects very quickly.
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