Analysts expect banks to repay around half a trillion euros worth of TLTRO loans at this week’s window – the first of several – which would make this the biggest drop in excess liquidity since records began in 2000.
“Clearly, Italy, Spain, Portugal and Greece would suffer from big repayments, whereas the impact would be smaller for Germany and France,” said Louis Harreau, a strategist at Credit Agricole. “If TLTRO repayments result in some indications of money market stress, the ECB could decide to introduce a new facility as a backstop to replace TLTRO but with much less generous terms,” he added.
“The latter is the part that should be repaid, with limited consequences for the real economy,” Brancolini said.
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