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TLTRO Spillovers Outside the Euro Area
Author:
Carolina Lopez-Quiles
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Adil Mohommad
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Series:
IMF Working Papers
Volume/Issue:
Volume 2025: Issue 034
Language:
English
Publication Date:
31 Jan 2025
DOI:
https://doi.org/10.5089/9798229000239.001
ISBN:
9798229000239
ISSN:
1018-5941
Pages:
25
Keywords:
Monetary policy; spillovers; TLTRO; CESEE; TLTRO operation; TLTRO exposure; spillovers from ECB's TLTROs; subsidiaries' share; ECB's Targeted Longer-Term Refinancing Operations; Deposit rates; Bank credit; Foreign banks; Business cycles; Europe
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We examine spillovers from ECB’s TLTROs on European countries outside the euro area. Using individual banks’ balance sheet data, we find that TLTROs lowered funding and lending rates for foreign-owned subsidiaries, especially in emerging market economies. We also find an increase in profitability among foreign subsidiaries and no effects on solvency risk. The effects are sizable--every €1 billion in exposure to TLTROs via parent banks is associated with 0.2 bps reduction in deposit rates and 0.4 bps reduction in lending rates of foreign subsidiaries. This underscores the need to factor euro area monetary policies into policy settings outside the euro area.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund