Longer-term refinancing business

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For longer-term refinancing operations (also basic tender ) abbreviated, LTROs, english longer-term refinancing operations (LTRO) is a type of monetary policy operations of the European Central Bank . The transactions are part of the so-called open market transactions and are accordingly carried out on the initiative of the central bank. In 2006, longer-term refinancing operations made up around 20 percent of the total refinancing volume on average. On the one hand, they are offered by the European Central Bank regularly (monthly) with a term of three months; In the wake of the financial and euro crisis, the ECB also offered transactions with longer terms of six, twelve or 36 months at irregular intervals (see below).

Just like their short-term counterparts, the main refinancing transactions offered weekly with a one-week term, longer-term refinancing transactions are also carried out either as repurchase transactions or by means of pawns. In the case of processing as a (genuine) repurchase agreement, the commercial banks must transfer assets to the creditor as collateral, with the repurchase being agreed at the end of the term ( repo transaction ); In the case of pawn loans, there is only an enforceable claim to be able to access assets from the debtor (the commercial bank) in the event of default. Which procedure is used depends on the customs of the respective national central bank through which the transaction is processed. In any case, only eligible collateral can be used as hedging assets ; In addition, the European Central Bank makes different haircuts depending on the creditworthiness of the securities.

Longer-term refinancing transactions are therefore liquidity-generating .

Euro debt crisis

In light of the euro crisis, several longer-term refinancing operations were conducted by the ECB to the normalization process and the functioning of the Euro - money market to support. The longer-term refinancing operations, also known as “Big Berta”, on December 21, 2011 and February 29, 2012 were carried out as tenders with a long term of three years. After the due date, the banks pay an interest rate that corresponds to the average ECB main refinancing rate ("key interest rate") prevailing during the term . At the time the three-year basic tenders were allotted, this key interest rate was 1.00 percent. After a year, at the beginning of 2013, banks made use of the option to repay these long-term loans of around one trillion euros early. In total, a good 20% or more than 200 billion euros was repaid in January / February 2013.

One expectation made by some observers and policymakers was that banks could use the ECB's loans to buy higher yielding government bonds with the aim of taking a profit on the interest rate differential. The French President Nicolas Sarkozy had stated in relation to the expansion of this crisis aid from the ECB: "This means that now every state can go to its banks, which will have liquidity at their disposal." Based on Sarkozy, the hypothesis in the Colloquial language now and then also the term "Sarkozy Trade" or "Sarko Trade" is used.

literature

  • Egon Görgens, Karlheinz Ruckriegel and Franz Seitz: European monetary policy. 5th edition Lucius & Lucius, Stuttgart 2008, ISBN 978-3-8282-0435-5 .

Individual evidence

  1. ↑ Press release of the European Central Bank of June 6, 2012
  2. ↑ Page of the ECB on "open market operations"
  3. ↑ See Görgens / Ruckriegel / Seitz 2008, p. 225.
  4. ↑ See Görgens / Ruckriegel / Seitz 2008, p. 225.
  5. ^ Page of the Deutsche Bundesbank ( Memento of the original from May 11, 2012 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. to "open market operations" @1@ 2Template: Webachiv / IABot / www.bundesbank.de
  6. ↑ Expert Council for the Assessment of Macroeconomic Development November 2012: Annual Report 2012/13 “Stable Architecture for Europe - Domestic Action Needed”, p. 88.
  7. ↑ David Enrich and Charles Forelle, "ECB Gives Banks Big Dollop of Cash," Wall Street Journal, March 1, 2012
  8. ^ European Central Bank: Key ECB interest rates. Internet http://www.ecb.int/stats/monetary/rates/html/index.en.html , accessed July 5, 2012.
  9. ↑ faz.net February 22, 2013 "Banks repay significantly fewer emergency loans than expected"
  10. ↑ "Euro Crisis - With the Sarko Trade to the Draghi Bubble" Financial Times Deutschland February 29, 2012 ( Memento of December 13, 2012 in the Internet Archive )
  11. ↑ “Debt Crisis - Deceptive Hope for the 'Sarkozy Trade'” ´FAZ.NET December 16, 2011