yes, it will keep a lid on dollar libor so bma ratios aren’t so much of a blowup trade from that aspect anymore.
And the lower rate could mean most all dollar funding in the eurozone goes this route which could be both a political problem for the US and a financial issue if it all goes bad and the ECB should somehow cease to exist. The ECB is a ‘shell company’ with a bit of gold and no member nation guarantees.
Also, if I were a US bank regulator seems I wouldn’t let member US banks invest FDIC funds in any euro member nation debt and/or related securities. I might not even allow lending to corporations with exposure that could interfere with their ability to service their loans. Regulators do this via increasing risk weights accordingly.
The US regulators have a fiduciary responsibility to US tax payers and if I were one of them I’d act accordingly unless specifically told otherwise by Congress.
Subject: Huge allotment at ECB 84days USD operation:
sizeable USD allotment at ECB 84-day $ operation: $50.685Bn at 59bps.
The total number of banks participating was 34.
With the halving in cost, the facility provided much cheaper than market x-ccy basis levels, clarly all the chatter around the stigma attached to the use of the line was inaccurate to say the least!