What is the LTRO?
The 'long term refinancing operation' - LTRO - is supposed to stop a massive European credit crunch. But what is it and how does it work? Indeed, will it work at all? Tim Bennett explains.
The 'long term refinancing operation' - LTRO - is supposed to stop a massive European credit crunch. But what is it and how does it work? Indeed, will it work at all? Tim Bennett explains.
Related videos
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
LTRO
The banks in turn have to post collateral to secure these funds. The lower the quality of this collateral, the bigger the haircut' ie, the lower the amount that can be borrowed. These funds can find their way into sovereign bonds, which carry a higher yield than 1%, allowing the bank to make a profit on the exercise. This buying should also push up prices and force down yields.
Another possibility is the banks hoard the money by putting it back on deposit at the ECB (at a lower rate). It can then be use to repay private funding at a later date. The least likely option is the money is lent out to firms and individuals, most of whom are currently debt-averse.
Entry from MoneyWeek's Financial glossary.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.
He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.
-
Which UK region has the most in savings? Average savings by area
The amount people have in their savings differs from region to region in the UK. How does your nest egg compare to those living nearby?
By Daniel Hilton Published
-
Doug and Mary Perkins: Specsavers’ clear-sighted founders
Helped by the deregulation of the sector in the 1980s and brilliant advertising, Mary Perkins and her husband Doug have taken Specsavers to the top of the optometry market
By Moneyweek Magazine Published