The market gendarme calls on banks for more transparency on ECB loans

It is one of the pillars of the European Central Bank’s support for the economy, via monetary policy. And it has taken on even greater significance with the coronavirus crisis. The ECB’s long-term targeted lending program (TLTRO) allows banks that maintain their loans to businesses and households to benefit from financing on extremely favorable terms.

Institutions which respect a certain level of outstanding loans will in fact be charged a negative interest rate of up to -1%. In other words, the ECB will remunerate the banks which have granted loans. Unsurprisingly, this initiative has been very successful with European banking players. As of January 1, TLTRO’s outstandings were close to 1,800 billion euros. That is almost as much as the 1.850 billion euros of the envelope that the central bank can devote to its pandemic emergency purchasing program (PEPP) on the markets.

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