IDEAS home Printed from https://ideas.repec.org/p/rmn/wpaper/201309.html
   My bibliography  Save this paper

3-Year LTROs – A First Assessment of a Non-Standard Policy Measure

Author

Listed:
  • Ansgar Belke

Abstract

This paper provides a first preliminary assessment of the recent two 3-year long-term refinancing operations (3Y LTROs) conducted by the ECB by putting them into a broader context. The perspective taken is that prevailing in the first half of the year 2012, directly after the path-breaking ECB decisions were made. The main aim of the paper is to convey an impression of the – not overall positive - general assessment of the LTRO measures which finally led to the implementation of an even more heavily debated unconventional monetary policy measure: the announcement of the Outright Monetary Transactions (OMT) later on in 2012. It should thus serve as a contemporary document. For this purpose, we look first at the risk of losses for the ECB and try to assess inflation dangers stemming from the 3Y LTROs. In the same section, we also look at the effects of LTROs on real activity and government bond yields and on further impacts which might well consist of distorting the interbank and the capital market in the euro area. We then investigate potential side-effects of the LTROs such as the effects on the real economy and on sovereign bond yields via the so-called Sarko trade and the increasing dependence of national banks in the euro area on ECB funding.

Suggested Citation

  • Ansgar Belke, 2013. "3-Year LTROs – A First Assessment of a Non-Standard Policy Measure," ROME Working Papers 201309, ROME Network.
  • Handle: RePEc:rmn:wpaper:201309
    as

    Download full text from publisher

    File URL: http://www.rome-net.org/RePEc/rmn/wpaper/rome-wp-2013-09.pdf
    File Function: First version, 2013
    Download Restriction: no

    More about this item

    Keywords

    European Central Bank; inflation; interbank market; long-term refinancing operations; monetary transmission mechanism; Sarko trade; sovereign bond yields;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rmn:wpaper:201309. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Albrecht F. Michler). General contact details of provider: http://www.rome-net.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.