ECB Extends Pandemic Emergency Longer-Term Refinancing Operations
ECB decided to offer four additional pandemic emergency longer-term refinancing operations (PELTROs) on a quarterly basis during 2021. Each operation will have a tenor of approximately one year. These operations will serve as a liquidity backstop to the euro area banking system and contribute to preserving the smooth functioning of money markets during the extended pandemic period. In addition, ECB extended by an additional 12 months, to June 2022, of period of favorable interest rates for banks that lend to the real economy
For the period from 24 June 2021 to 23 June 2022, the interest rate on all outstanding TLTRO III operations will remain 50 basis points below the average rate applied in the Eurosystem’s main refinancing operations over the same period. The interest rate on the main refinancing operations is currently 0%. Various changes have been also made to the terms and conditions of the third series of targeted longer-term refinancing operations (TLTRO III). The extension of the pandemic-related low interest rate period, the addition of three more operations and the increase in the amount that can potentially be borrowed under TLTRO III will preserve the very attractive funding conditions that over the past few months have supported banks’ efforts to keep credit flowing to the real economy in a time of high stress. This will help banks to secure the liquidity they need to extend loans to households and firms on very favorable lending terms.
Keywords: Europe, EU, Banking, TLTRO, PELTRO, Bank Lending, COVID-19, Liquidity Risk, ECB
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Senior practitioner in asset and liability management (ALM) and liquidity risk who assists banking clients in advancing their treasury and balance sheet management objectives
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