Targeted Longer-Term Refinancing Operations

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The targeted longer-term refinancing operations (TLTROs) provide financing to Eurosystem credit institutions with maturities longer than one year. They are designed to improve the functioning of the monetary policy transmission mechanism by stimulating bank lending to the real economy.

The TLTROs conducted until March 2017 were launched as part of two distinct programmes: TLTRO-I, announced in June 2014 and comprising eight auctions, and TLTRO-II, announced in March 2016 and comprising four auctions. In both programmes the amount that banks could borrow was linked to their loans to non-financial corporations and households (except those to households for residential mortgages).

In March 2019 the ECB Governing Council announced a third series of quarterly targeted longer-term refinancing operations (TLTRO-III), to be carried out starting in September 2019 and ending in March 2021. Like the previous programmes, the operations will feature built-in incentives for credit conditions to remain favourable. In September 2019, in light of the less-favourable economic outlook, the Governing Council decided to change some of the parameters of the operations. Each operation will have a maturity of three years and will be conducted at a rate equal to the interest rate on the main refinancing operations over the life of the respective TLTRO-III. For counterparties whose eligible net lending between the end of March 2019 and the end of March 2021 exceeds their benchmark net lending, the rate applied to TLTRO III operations will be lower, and may be as low as the average rate on the deposit facility over the life of the respective operation. A voluntary repayment option is envisaged, exercisable every quarter starting 24 months after the settlement of each operation. Under TLTRO-III, counterparties will be entitled to borrow up to 30 per cent of the stock of eligible loans as at 28 February 2019.

Further details about the TLTRO-III programme can be found in the ECB's press releases, published on 6 June 2019 and 12 September 2019.

Further details from the ECB website