FIG fears rise before second LTRO slug as market asks ‘what next?’
With expectations of a €1tr or higher second long term refinancing operation (LTRO) by the European Central Bank next Tuesday having slumped to €400m-€500m, a more muted impact is in prospect than after December’s exercise.
Around 200bn of the 489bn of liquidity that banks took up in Decembers first LTRO was existing ECB funding rolled into the new three year tenor, according to estimates. But while the majority of funds handed out on Tuesday should be new funding, market participants forecast that the
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