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Targeted longer-term refinancing operations (TLTRO)

The Governing Council created the targeted longer-term refinancing operations (TLTRO) to stimulate bank lending to the real economy and strengthen the transmission of monetary policy.

The first series of TLTRO was announced on 5 June 2014:

  • It covers eight quarterly operations starting in early September 2014, maturing in September 2018; 
  • In the first two operations, banks are entitled to a borrowing allowance of up to 7% of a specific part of their eligible loans. In the subsequent TLTROs, banks will be able to borrow additional amounts, depending on developments in banks’ eligible credit activity compared with a specified benchmark for each bank; 
  • The interest rate on these operations is fixed over the life of each operation at the rate prevailing at the time of take-up.

The second series of TLTRO (TLTRO-II) was announced on 10 March 2016, with the additional purpose of reinforcing the Eurosystem’s accommodative monetary policy stance and stimulating bank lending to the real economy:

  • It consists of four quarterly operations, with a maturity of four years for each one, starting in June 2016; 
  • Banks are able to borrow a total amount of up to 30% of a specific part of their eligible loans in the four operations as a whole; 
  • The interest rate on these operations is fixed at the rate applied in the main refinancing operations (MRO) prevailing at the time of allotment. In addition, banks whose eligible net lending exceeds their benchmark are charged a lower rate. This implies a cut in interest rates on these operations, which, at most, will be equal to the difference between the MRO rate and the rate on the deposit facility applicable at the date of allotment of each operation.