AFP, Frankfurt :
The European Central Bank Thursday will again offer banks a chance to get cheap long-term loans, but a disappointing uptake could put it under more pressure to help kickstart the moribund economy.
By pumping more liquidity into the financial system, the Frankfurt-based central bank aims to boost the eurozone economy via private-sector loans and, in turn, halt a stubborn drop in inflation.
The ECB unveiled a lending programme called the Targeted Long-Term Refinancing Operations (TLTRO) in June, announcing eight rounds of borrowing to banks until 2016.
Under the first round in September, it said it had leant 82.6 billion euros ($102.4 billion) to 255 banks, below the forecasts of analysts who had pencilled in an uptake of at least 100 billion euros.
It’s very, very difficult to estimate precisely what takeup of the TLTRO will be,” ECB president Mario Draghi told reporters after last week’s decision-making governing council.
Several analysts estimated an uptake this time around of about 150 billion euros. The outcome will be announced at 1015 GMT.
The new measure is different from the steps the ECB took at the end of 2011 and the beginning of 2012 to boost liquidity.
At that time, banks were deemed to be not lending enough to the small- and medium-sized companies that form the backbone of the eurozone economy.
This time, the ECB is instead targeting loans to encourage banks to lend the money on.
The European Central Bank Thursday will again offer banks a chance to get cheap long-term loans, but a disappointing uptake could put it under more pressure to help kickstart the moribund economy.
By pumping more liquidity into the financial system, the Frankfurt-based central bank aims to boost the eurozone economy via private-sector loans and, in turn, halt a stubborn drop in inflation.
The ECB unveiled a lending programme called the Targeted Long-Term Refinancing Operations (TLTRO) in June, announcing eight rounds of borrowing to banks until 2016.
Under the first round in September, it said it had leant 82.6 billion euros ($102.4 billion) to 255 banks, below the forecasts of analysts who had pencilled in an uptake of at least 100 billion euros.
It’s very, very difficult to estimate precisely what takeup of the TLTRO will be,” ECB president Mario Draghi told reporters after last week’s decision-making governing council.
Several analysts estimated an uptake this time around of about 150 billion euros. The outcome will be announced at 1015 GMT.
The new measure is different from the steps the ECB took at the end of 2011 and the beginning of 2012 to boost liquidity.
At that time, banks were deemed to be not lending enough to the small- and medium-sized companies that form the backbone of the eurozone economy.
This time, the ECB is instead targeting loans to encourage banks to lend the money on.
