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Summaries of EU Legislation

Targeted longer-term refinancing operations (TLTROs)

 

SUMMARY OF:

Decision 2014/541/EU on measures relating to targeted longer-term refinancing operations (ECB/2014/34)

Decision (EU) 2016/810 on a second series of targeted longer-term refinancing operations (ECB/2016/10)

Decision (EU) 2019/1311 on a third series of targeted longer-term refinancing operations (ECB/2019/21)

WHAT IS THE AIM OF THE DECISIONS?

The decisions enable the Eurosystem to carry out targeted longer-term refinancing operations (TLTROs), according to the rules in the decisions, in order to maintain or increase banks’ lending to businesses and consumers.

KEY POINTS

TLTROs consist of liquidity-providing reverse transactions*, carried out by national central banks in a decentralised way, through standard tenders and in the form of fixed-rate procedures.

Through the decisions, the European Central Bank (ECB) has launched three series of TLTROs: TLTRO I in 2014, TLTRO II in 2016 and TLTRO III in 2019. The first and second series have already ended, while participation in the third series is still ongoing.

The decisions aim to regulate the following operations that apply to the respective TLTRO series:

  • borrowing allowances;
  • interest rates;
  • early repayment options;
  • reporting requirements;
  • penalties for participants that fail to comply with the reporting requirements.

Institutions may participate in TLTROs either individually or as part of a group, according to certain conditions.

Since the adoption of Decision (EU) 2019/1311, the parameters and conditions of TLTRO III have been adjusted several times, as considered necessary, proportionate and appropriate in light of the risks to price stability, the monetary policy transmission* mechanism and the economic outlook in the euro area at the time. The adjustments aim to implement the monetary policy stance* appropriate to maintain and restore price stability over the medium term.

FROM WHEN DO THE DECISIONS APPLY?

  • Decision 2014/541/EU has applied since 29 August 2014.
  • Decision (EU) 2016/810 has applied since 3 May 2016.
  • Decision (EU) 2019/1311 has applied since 3 August 2019.

BACKGROUND

TLTROs are one of the ECB’s main tools to preserve favourable financing conditions and help support the economy. They provide banks with long-term funding at favourable cost, provided that they support lending to firms and households. This encourages banks to lend when they might otherwise be more hesitant to do so.

TLTROs keep borrowing costs low and support saving and investment, especially when the economy faces major challenges. This in turn helps to bring inflation towards the ECB symmetric target* of 2% over the medium term.

For further information, see:

KEY TERMS

Reverse transaction. An operation where a central bank buys or sells assets under a repurchase agreement or conducts credit operations against collateral.
Monetary policy transmission. The process through which monetary policy decisions affect the economy in general and the price level in particular.
Monetary policy stance. The contribution made by monetary policy to economic, financial and monetary developments.
Symmetric target. ’Symmetric’ means that both negative and positive deviations of inflation from the target are equally considered undesirable.

MAIN DOCUMENTS

Decision 2014/541/EU of the European Central Bank of 29 July 2014 on measures relating to targeted longer-term refinancing operations (ECB/2014/34) (OJ L 258, 29.8.2014, pp. 11–29).

Successive amendments to Decision 2014/541/EU have been incorporated into the original text. This consolidated version is of documentary value only.

Decision (EU) 2016/810 of the European Central Bank of 28 April 2016 on a second series of targeted longer-term refinancing operations (ECB/2016/10) (OJ L 132, 21.5.2016, pp. 107–128).

See consolidated version.

Decision (EU) 2019/1311 of the European Central Bank of 22 July 2019 on a third series of targeted longer-term refinancing operations (ECB/2019/21) (OJ L 204, 2.8.2019, pp. 100–122).

See consolidated version.

last update 12.12.2022

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