LTROs are repo auctions used by the ECB for the conduct of monetary policy. They form part of the central bank's open market operations, but instead of providing short-term financing for commercial banks, as is done through MROs, the LTROs offer longer-term financing, typically using repos that mature after three months. This one of the normal tools used by the ecb to conduct monetary policy, but the reason why it has gotten so much attention recently is because of the amount of money and the maturity of these recent loans - auctioned on december 22nd. The loans typically mature in 3 months, these mature in 3 years and almost 500 billion euros worth were auctioned off for banks to borrow. So cheap money - made available for a long time. The reason the ecb did this was it was hoping banks would borrow that money and buy higher yielding sovereign debt...thus helping to mitigate the funding crisis for nations in the eurozone. They didn't do that - instead that money ended up back at the ecb's deposit facility which we've covered before - earning less interest on those deposits than the banks paid to borrow that money in the first place.
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