Economics
ECB Seen Paying Banks to Make Loans Amid Bleak Economic Outlook
- Banks could face interest rate on long-term funding below MRO
- Announcement on TLTRO terms most likely in June, survey shows
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The European Central Bank will pay banks to lend as it tries to find ways to support economic growth that looks increasingly shaky, according to a survey.
The cost of new long-term funding for banks which raise credit growth above a certain level will be lower than the main refinancing rate, with a median estimate pointing to a difference of 20 basis points. At current conditions, that would effectively provide lenders with a source of interest income as they struggle with weak profitability and a slower expansion.