Draghi Loan Plan Missing Estimates Hampers ECB Stimulus
Mario Draghi is facing renewed pressure to implement quantitative easing after banks borrowed less than estimated in the European Central Bank’s first targeted-loan offer.
The Frankfurt-based ECB lent 82.6 billion euros ($106.5 billion) to euro-area banks at a fixed interest rate of 0.15 percent in its targeted longer-term refinancing operations today.
Draghi has signaled he wants to boost the institution’s balance sheet to as much as 3 trillion euros from 2 trillion euros.
The ECB’s four-year loans are intended to spur lending to the real economy, with the offers of cheap cash tied to the size of banks’ loan books.
ECB Vice President Vitor Constancio said today that the total take-up of the TLTROs will be “significant” and will lead the balance-sheet expansion.
Banks may prefer to wait for the end of the ECB’s health check of bank balance sheets. The results of the Comprehensive Assessment will be published next month shortly before the central bank becomes euro-area supervisor.
Draghi’s liquidity drive underscores how the world’s biggest economies are diverging. The central banks of China and Japan are also adding stimulus, while the U.S. Federal Reserve and the Bank of England are debating when to tighten policy as their economies recover.
Source: bloomberg- Draghi Loan Plan Missing Estimates Hampers ECB Stimulus
