En primer lugar, se altero el ratio LTRO
/MRO; en segundo lugar, se puso en marcha la FRFA, que elimino el limite cuantitativo de estas facilidades, y finalmente llegaron los alargamientos de las LTRO
hasta alcanzar un vencimiento de tres anos.
Another round of LTRO
, not necessary at the moment, also remains a part of the arsenal.
Quite a few stronger banks paid back as soon as possible, whereas weaker banks took money in the second LTRO
The results of the CBPP and LTRO
expansion were mixed.
The enhanced credit support relied on (a) increasing the share of liquidity supplied at its long-term refinancing operations (LTROs
) relative to its regular main refinancing operations (MROs); and (b) increasing the maturity structure of its LTROs
The ECB had a number of options on Thursday: it could have bought more member state bonds on the secondary market through its security market programme (SMP); it could have extended its LTRO
programme to provide more low-cost loans to troubled banks; it could have given the newly formed European security mechanism (ESM) a banking license, enabling the ECB to lend to the ESM directly and greatly increasing the ESM's firepower, or it could have cut its lending rate, currently 0.
The European Central Bank's unlimited LTRO
is the logical extension of this.
Yet the Bundesbank was forced to acquiesce in the orthodox monetary policies of the ECB LTRO
even as Chancellor Merkel insisted that Europe's debtors adopt balanced budget amendments in the fiscal compact that sealed German dominance in the EU.
The alternative is more LTRO
which will increase risk appetite, triggering "core to periphery" flows.
The ECB's twin trillion Euro LTRO
have reduced the systemic risks in European banking and engineered a dramatic fall in Spanish/ Italian government bond yields.
Following that announcement there have been two LTRO
auctions which provided about 1 trillion [euro] of gross extensions of collateralized three-year liquidity to European banks at interest rates starting at 1 percent.
The agency observed that the potential funding squeeze will be moderate as the slow nature of the potential European retrenchment, now further moderated by the LTRO
(long term refinancing operation) of the European Central Bank, will provide a timing buffer, allowing for regional adjustments.