The European Central Bank introduced the latest set of stimulus measures primarily to encourage banks to increase lending to households and companies, stated ECB official Francois Villeroy de Galhau on Monday.
The goal of the new ultra-cheap loans to banks announced last week as part of a broader package of stimulus monetary measures is not to compensate them for the costs of negative interest rates on deposits at the central bank, but to encourage them to increase lending, Villeroy, who is also the governor of the French central bank, said.
– Our priority, which we have emphasized, is financing the real economy, Villeroy said while presenting the results of the French central bank’s operations in 2015.
An important step in the same direction is the ECB’s decision to start purchasing corporate bonds in addition to government bonds, he noted.
As part of the new measures package, the ECB announced at last week’s regular meeting the introduction of four new rounds of targeted long-term refinancing operations (TLTRO II), with maturities of four years each, starting from June 2016, Reuters recalls. These loans will be granted at the key interest rate, which has now been lowered to zero percent, with more active lenders enjoying discounts.
– A bank that is very active in lending to the real economy can receive more loans than those focusing on other activities, ECB chief Mario Draghi stated on Thursday at a press conference in Frankfurt following the announcement of the monetary policy decision.
