The European Central Bank could consider renewing its offer of free long-term liquidity to lenders though it shouldn’t turn it into a permanent measure, a Governing Council member said.
Targeted longer-term refinancing operations are “a very practical and very helpful instrument; I would be very flexible regarding that instrument in the future,” Bank of Lithuania Governor Vitas Vasiliauskas said in a Bloomberg interview in Vilnius on Tuesday. “I still think that TLTROs are not an ordinary monetary policy, that they remain an emergency tool.”
The ECB is scheduled to offer the last of its long-term loans to banks next month, raising the prospect that it might announce fresh operations to smooth its monetary policy in a year of heightened political risk. The measure, while less well-known than negative interest rates and the 2.28 trillion-euro ($2.4 trillion) bond-buying program, has been a key plank of the institution’s stimulus efforts to reinvigorate the euro-area economy.
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Craig Erlam
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