The Central Bank of Ireland has updated its financial statement (xcel) to include the end of December figures.

I have written here before about Emergency Liquidity Assistance provided by the Irish Central Bank, and the December figures show (yet another) large jump in the number reported in the ‘other assets’ column of the financial statement.

In December the figure has risen by €6.5bn to €51bn.

click to enlarge

No sign of any improvement there then..

But there is a new number to wonder about. Under ‘fine tuning reverse operations’ there is an entry of €12.3bn, it appears on the asset side of the statement, so I assume it is liquidity providing. It is worth noting that this column has been empty since at least 2003 (as far back as the numbers are readily available from the Central Bank).

The ECB provides an explation of fine tuning operations in here. (pdf)

They say:

The Eurosystem can execute fi ne-tuning
operations in the form of reverse open market
transactions. Fine-tuning operations aim to
manage the liquidity situation in the market and
to steer interest rates, in particular in order to
smooth the effects on interest rates caused by
unexpected liquidity fl uctuations in the market.
Fine-tuning operations may be conducted on
the last day of a reserve maintenance period to
counter liquidity imbalances which may have
accumulated since the allotment of the last main
refi nancing operation. The potential need for
rapid action in the case of unexpected market
developments makes it desirable to retain a high
degree of fl exibility in the choice of procedures
and operational features in the conduct of these
operations.
The operational features of the fi ne-tuning reverse
operations can be summarised as follows:
• they can take the form of liquidity-providing
or liquidity-absorbing operations;

• their frequency is not standardised;
• their maturity is not standardised;
• liquidity-providing fi ne-tuning reverse
transactions are normally executed through
quick tenders, although the possibility of
using bilateral procedures is not excluded
(see Chapter 5);
• liquidity-absorbing fi ne-tuning reverse
transactions are executed, as a rule,
through bilateral procedures (as specifi ed in
Section 5.2);
• these operations are normally executed
in a decentralised manner by the national
central banks (the Governing Council of the
ECB can decide whether, under exceptional
circumstances, bilateral fi ne-tuning reverse
operations may be executed by the ECB);
• the Eurosystem may select, according to the
criteria specifi ed in Section 2.2, a limited
number of counterparties to participate in
fi ne-tuning reverse operations; and
• marketable and non-marketable assets
(as specifi ed in Chapter 6) are eligible as
underlying assets for fi ne-tuning reverse
operations.

The ECB also provides a table showing the different implementations of monetary policy operations:

Liquidity providing fine tuning operations can take be in the form of ‘foreign exchange swaps’. Could the €12.3bn of fine tuning operations be related to this press release from the ECB on the 17th December where the ECB announced that it had signed a £10bn swap agreement with the BOE? At end December, £10bn was worth only €11.7bn, so possibly not. But it is hard to see any other easy explanation for the number.

Other ideas theories/ideas welcome in the comments section below.

Update: Eoin has provided grounding (once again) to my random musings in comment below:

on Dec 23rd:

*ECB ALLOTS EU20.6 BLN EUROS IN 13-DAY FINE-TUNING TENDER
*ECB SAYS 32 BANKS BID FOR 13-DAY TENDER AT FIXED 1%

Think it was just a year end liquidity provision in addition to the regular operations, to help smooth out their long term repo which matured on 23rd of Dec, and which, given the time of year, may have been difficult for some people to roll.

” The “fine-tuning operation aims to smooth out the liquidity effects of the longer-term refinancing operations maturing today,” the ECB said in a previous statement.”

So, I guess the Sterling is still missing..