Sober Look | Jun 17, 2012 02:04AM ET
When a non-Eurozone central bank holds euros, it tends to deposit those euros with the ECB. So when the Fed executed its trying to keep the peg at 1.2) , it buys a great deal of euros and of course promptly deposits them at the ECB, increasing the non-resident liability .
Therefore this second spike is created by flight of capital our of the Eurozone (the ECB provides this data on a weekly basis - ht Kostas Kalevras - allowing one to monitor the trend closely). Note, these euros are still held within the Eurozone (the amount of euros is always fixed unless the ECB chooses to change it), but they no longer belong to Eurozone residents. These Eurozone residents have swapped these euros for Swiss Francs. .
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