Brussels, 12/12/2014 (Agence Europe) - On Thursday 11 December, the European Central Bank (ECB) allocated €129.84 billion in liquidity to banks under the TLTRO operation.
Since the launch of this new targeted injection of low-cost cash into the bank sector, which is due to run into 2016, European banks have raised more than €212 bn. In September, more than 250 financial bodies borrowed €82.6 billion in the first round of TLTRO (see EUROPE 11158).
Banks' appetite for this financing may convince the ECB, which wants to increase its balance sheet by a trillion extra euros, to launch a new programme of mass purchase of sovereign bonds and other bonds. A decision on this European-style quantitative easing may be taken at the upcoming meeting of the ECB Governing Council on Thursday 22 January 2015 or in early March. The risk of even greater falls in inflation is another factor to be taken into account.
On Wednesday 14 January, on request from the German constitutional court in Karlsruhe, the European Court of Justice will publish its highly awaited conclusions on a preliminary ruling on the lawfulness of the EU's OMT sovereign bond purchase scheme that was drawn up in 2012 but has not yet been used. Its creation helped calm nerves on the eurozone sovereign debt market. (MB)