European Central Bank (ECB) Targeted Long Term Refinancing Operations (TLTRO)

The European Central Bank's Targeted Long-Term Refinancing Operations (LTRO) mean operations from the ECB aimed to provide long-term funding at attractive conditions to commercial banks in the eurozone. These operations should stimulate bank lending to the real economy.

The TLTRO program was launched on June 5, 2014. A second series (TLTRO II) started on March 10, 2016. These measures were taken to reinforce the ECB's current monetary policy by stimulating bank lending in the eurozone. The targeted nature of the program is connected with the fact that funds are provided to commercial banks only on the condition that they will lend them to non-financial organizations and households (individuals).

These operations provide financing to the eurozone. Growth of lending is expected to increase industrial activity and consumer spending. The general aim of such operations is to increase inflation to the target level and to boost the economy of the eurozone.

The interest rate to be applied in TLTRO II depends on lending patterns of participating banks. The more loans that banks issue to non-financial corporations and households, the more attractive the interest rate on their TLTRO II borrowings becomes. However, loans to households for house purchases are excluded.

Growth in targeted refinancing values indicates an expansion of the financial easing. TLTRO increase leads to inflation growth and is seen as negative for the euro.