FRANKFURT, Nov 22 (Reuters) - It is too early for the European Central Bank to decide on a new round of multi-year loans to banks, which are covered by existing funding until the middle of next year, the ECB’s chief economist said in an interview published on Thursday.
Peter Praet’s comments dashed hopes that the ECB was about to launch a new Targeted Longer-Term Refinancing Operation (TLTRO) to alleviate the pressure on struggling lenders in countries such as Italy and Greece.
“It is premature to decide on a new TLTRO now,” Praet told Handelsblatt, confirming what sources had told Reuters.
TLTROs - essentially cheap multi-year loans to banks - have been one of the tools through which the ECB has revived price growth in the euro zone in recent years by stimulating lending.
With the latest TLTRO starting to mature in June 2020, banks will need to start looking for alternative sources of cash towards the middle of next year to meet regulatory demands.
“This will start to have effects on the net stable funding ratio as of mid-2019,” Praet said. “The banks are aware of this and they have been preparing themselves for it.” (Reporting By Francesco Canepa)