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Foreign media: European bank QE has launched a new round of TLTRO attractive or not strong enough

Full information Although the European central bank (ECB) declared targeted long-term refinancing operations (tltros) to be crucial for reviving euro zone economic growth and inflation before resorting to quantitative easing (QE), Banks may be less interested in participating in this third round of tltros, according to a well-known foreign media report on Thursday.

Euro zone Banks are expected to borrow a total of 40 billion euros ($42.5 billion) from the European central bank through TLTRO, with expectations ranging from 15 billion euros to 100 billion euros, according to the median forecast of 24 economists polled by foreign media. In 2014, the ECB released a total of 212 billion euros through two tltros.

Tltros were at the heart of European central bank President Mario draghi's plan to expand its balance sheet to €1tn when it was announced in June 2014. However, interest rates on these loans were above benchmark rates, disappointing demand conditions and a worsening inflation outlook finally led ECB policymakers in January to decide to step up the stimulus through massive asset purchases.

"The asset purchases are more important than tltros in terms of providing liquidity," said Thomas Harjes, senior European economist at barclays in Frankfurt. But the results of this round of tltros, which are expected to total 35 billion euros, give us a better idea of what might happen to bank balance sheets."

The ECB will announce the results of the operation this trading day and, to make it more attractive, will charge interest at the main refinancing rate, currently 0.05 per cent, removing the 10 basis point premium charged on the previous two operations.