What threatens the euro to a bad start TLTRO
Results of the first TLTRO, held on Thursday this week, is not impressive: European banks have loans totaling 82.6 billion euros, which casts doubt on the ability of the European Central Bank to ease monetary policy sufficiently to stimulate the economy.. According to analysts of Bank of Tokyo-Mitsubishi (BTMU), doubts on this score will help to stabilize the euro at some time near current levels. Although, of course, it is not worth it to rush to premature conclusions. BTMU cites three arguments in support of his point of view:
Firstly, the uncertainty associated with the test of the quality of assets (AQR) - the results will be announced next month - could dampen demand for cheap loans to the Central Bank.
Second, low interest in the program may be due to the fact that banks are waiting for announcement of a large-scale QE at the next meeting on 2 October, in addition, some are hoping that by December the ECB will change the credit terms at more attractive.
Finally, in December TLTRO closer to the maturity of previous programs of the European Central Bank's long-term refinancing, so many prefer to wait until December. However, if the low demand for loans due to the fact that banks do not see the demand for loans from small and medium-sized businesses, and fear that they will have to pay a percentage of the deposited funds in the accounts with the ECB, the effectiveness of the program can be a big question .
In this case, the December auction will also feature a weak result, forcing the European Central Bank to take more drastic measures. Otherwise, expand the balance 1 trillion. euro to the level of 2012 (about 3 trillion. euros) will be very difficult. Thus, the clamor of additional incentives will lead to the fact that the dynamics of a rising euro will be temporary and will not receive a significant razvitiya.Istochnik: Forexpf.Ru - Forex Market News
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