Italian banks exploit ECB tiering to sharply boost local deposits

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Italian banks sharply increased their excess reserve holdings at the Bank of Italy following the introduction of the European Central Bank’s two-tier rates system on October 30, highlighting a possible conundrum for policy-makers.

Between October 30 and November 8, commercial banks increased their liquidity holdings at the national central bank by around €52 billion ($57 billion), according to data published by the ECB on November 12.

On October 30, the ECB’s two-tier system came into force.

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