ECB weighing more cheap funds for banks, says Coeure
ECB board member Benoit Coeure has said it is discussing the idea of issuing new multi-year cheap loans to banks, which in some countries face a funding cliff-edge next year when previous loans must be repaid.
Banks in Italy and other southern European nations in particular could face funding problems as the ECB’s most recent Targeted Long-Term Refinancing Operation (TLTRO) nears its repayment date in 2020.
Speaking in New York, Mr Coeure said a new TLTRO was possible and there might be scope for it but such an operation should serve “a purpose”, likely meaning it should help the ECB achieve its inflation target rather than simply helping banks.
“It is possible, we are discussing it,” Mr Coeure said. “But we want to be sure that it serves a ... purpose.” He later added: “There might be scope for another TLTRO.”
This were the clearest remarks to date on the subject. ECB President Mario Draghi was non-committal at his latest press conference, on January 24, simply saying the issue had been raised by some policymakers at that day’s meeting.
Mr Coeure, seen as one of Mr Draghi’s possible successors when the latter’s term runs out on October 31, added that the eurozone’s recent economic slowdown is more pronounced than earlier expected, suggesting that the path of inflation will also be more shallow.