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The ECB said it is cutting its central "refi" refinancing rate to zero percent from 0.05 percent previously/AFP

Finance

ECB loans 7.3 bn euros to banks at ultra-cheap rates

The ECB said it is cutting its central "refi" refinancing rate to zero percent from 0.05 percent previously/AFP

The ECB said it is cutting its central “refi” refinancing rate to zero percent from 0.05 percent previously/AFP

FRANKFURT, Germany, Mar 24 – The European Central Bank said Thursday that it had leant 7.3 billion euros ($8.1 billion) in ultra-cheap loans to banks in the latest round of its plan to kick-start lending to households and businesses.

The uptake in the ECB’s liquidity programme, known as TLTRO, was lower than in previous rounds. It will be succeeded in June by an even cheaper loan scheme.

In its seventh round of lending under the Targeted Long-Term Refinancing Operations (TLTROs), first launched in September 2014, a total 19 banks borrowed 7.3 billion euros at a fixed rate of zero percent, the ECB said.

The amount was much lower than in previous rounds: in December last year, 55 banks borrowed 18.3 billion euros while in September, 88 had borrowed 15.6 billion euros.

The TLTRO scheme was designed as a way of kick-starting lending in the euro area because the ECB makes the cash available to banks on condition they lend it on to households and businesses.

But the current programme is to be replaced by an updated liquidity programme from June, under which loans will be made available to banks for a period of four years at even better rates.

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