FRANKFURT – Euro-zone bank overnight deposits with the European Central Bank rose Thursday but remained below the record high reached earlier this week. Nonetheless, overnight deposits with the ECB remain elevated and have been reaching records ever since the ECB boosted liquidity in the banking system by offering a massive amount of three-year loans, the longest maturity ever offered by the central bank, to prevent a funding crisis. Banks deposited EUR420.949 billion with the ECB Thursday, the central bank said Friday, up from EUR395.327 billion Wednesday. That's still down from Tuesday's all-time high of EUR528.184 billion. The ECB said in its Monthly Bulletin Thursday that the amount lent under its three-year loan offer would show up either in banks' current accounts or "recourse to the deposit facility, irrespective of the use that individual banks make of the newly available liquidity." "The payment system is effectively closed, so that reserves will always just get passed from one bank to another, even if individual banks are lending the funds," JPMorgan Chase economist Greg Fuzesi noted recently. The rise and fall in the overnight deposits are also influenced by the maintenance period for banks' minimum reserve requirements as set by the central bank. The overnight deposits tend to rise as the end of the reserve period approaches and fall at the start of each period. The previous maintenance period ended Tuesday and the current period started Wednesday. Banks borrowed EUR3.04 billion from the ECB Thursday, down slightly from EUR3.317 billion Wednesday. Copyright © 2012 Dow Jones Newswires Read more: http://www.foxbusiness.com/news/2012/01/20/euro-zone-banks-overnight-deposits-with-ecb-rise/#ixzz1jzR8zbnS

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