The commercial banks of the euro zone will return in advance to the European Central Bank (ECB) 296,293.74 million euros of very cheap liquidity that they lent to them because the institution changed the conditions.
The ECB said on Friday that the early amortization will be settled on November 23.
Commercial banks were required to notify their national central bank by 5:00 p.m. on November 16 of the amounts to be repaid in advance, these amounts being binding once communicated to the central bank.
The ECB, which began raising interest rates in July, wants banks to repay their loans at a very low price and, to do so, changed the conditions for refinancing operations.
The ECB lent banks, between September 2019 and December 2021, three-year money at very low interest rateseven negative, so that they would lend quickly to the real economy, companies and households, thus boosting economic growth, especially during the pandemic.
These operations provided banks with very cheap and safe financing, as the ECB improved pandemic conditions so that they could keep lending in circumstances where banks would not normally lend.
Nine of the ten operations in this third round of three-year financing operations have not yet been repaid.
Currently, 2,100 million euros of these operations are active, less than half of an excess liquidity of 4,700 million euros.
With the initial conditions and the pandemic, these operations are very expensive for the ECB and the national central banks after the interest rate hike.
Source: Observadora
