ECB's LTRO Has Little Impact on Risky Assets

The European Central Bank (ECB) gave the Eurozone another huge boost this week. The central bank offered 529.5 billion euros ($712.8 billion) in three year loans to 800 of the region's banks.

The ECB's lending strategy, known as the LTRO or Long Term Refinancing Operation, provides term loans to government banks at low market rates. The LTRO lending program is designed to ease liquidity pressures on Eurozone banks by providing them with lower rate loan options.

The offering is the second of its kind by the central bank. The first offering, last December, helped to rally Spanish and Italian bonds. So far, the second offering has minimally impacted risky assets in Spain and Italy but the ECB is hoping the second offering will have broader effects on rate offerings in Eurozone government bond markets.

Wall Street Journal
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ECB's LTRO Has Little Impact on Risky Assets