Targeted longer-term refinancing operations
Under targeted longer-term refinancing operations (TLTROs), credit institutions may borrow from the Bank of Lithuania or other Eurosystem central banks under favourable terms for periods of up to three years.
Third series of targeted longer-term refinancing operations (TLTRO III)
On 7 March 2019 (along with 12 September amendments), the Governing Council of the European Central Bank (ECB) decided to launch a new series of quarterly targeted longer-term refinancing operations (TLTRO-III), starting in September 2019 and ending in March 2021, each with a maturity of three years. These new operations will help to preserve favourable bank lending conditions and the smooth transmission of monetary policy. The interest rate in each operation will now be set at the level of the average rate applied in the Eurosystem’s main refinancing operations over the life of the respective TLTRO. For banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III operations will be lower, and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation.
For the period from 24 June 2020 to 23 June 2021, the interest rate on all TLTRO III operations outstanding during that time will be 25 basis points below the average rate applied in the Eurosystem’s main refinancing operations over the same period. From 24 June 2020 to 23 June 2021, for counterparties whose eligible net lending between 1 April 2020 and 31 March 2021 reaches the benchmark, the interest rate applied on all TLTRO III operations outstanding over that period will be 25 basis points below the average interest rate on the deposit facility prevailing over the same period, and in any case not higher than -0.75%. More details are availabe on 12 March 2020 ECB press release.
Early repayment option available after one year from settlement starting in September 2021
Second series of targeted longer-term refinancing operations (TLTRO II)
On 10 March 2016, the Governing Council of the European Central Bank (ECB) decided to further incentivise bank lending to the real economy and launch four second series targeted longer-term refinancing operations (TLTRO II). All of the new operations have a four-year maturity. These operations are conducted from June 2016 at a quarterly frequency.
The interest rate applied to amounts borrowed may range from the main refinancing rate to the deposit facility rate depending on the counterparty’s lending performance.
Counterparties will be able to repay the amounts borrowed under TLTRO II at a quarterly frequency starting two years from the settlement of each operation. Counterparties will not be subject to mandatory early repayments.