Editing European Central Bank (section)

===== New TLTRO III and PELTROs =====
On 30 April 2020, the ECB Governing council introduced additional measures to support the economy during the Covid19 pandemic, including PELTROs and new modalities for the TLTROs.

First, the ECB made several adjustments to the framework of its TLTRO III.<ref name="Bank-2020c">{{Cite journal |date=2020-04-30 |title=ECB announces new pandemic emergency longer-term refinancing operations |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200430_1~477f400e39.en.html |access-date=2023-12-07 |website=European Central Bank - Eurosystem}}</ref> A key change was that the ECB also reduced the interest rate applied to these open market operations to a rate going as low as -1% for the banks meeting the lending threshold of 0%.<ref name="Bank-2020c" /> With the TLTRO III, the participating banks were thus enabled to borrow at lower interest rates than those paid on their excess reserve.<ref name="Castillo Lozoya-2022">{{Cite journal |last1=Castillo Lozoya |first1=M. Carmen |last2=García-Escudero |first2=Enrique Esteban |last3=Pérez Ortiz |first3=Maria Luisa |date=2022-04-07 |title=The Effect of TLTRO III on Spanish Credit Institutions' Balance Sheets |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4101166 |journal=Banco de España |issue=9/22 |pages=3–8 |ssrn=4101166 |via=Social Science Research Network}}</ref>  Another key change was thet ECB's decision to expand bank's borrowing allowance under TLTRO III from 30% to 50%, then up to 55% of their portfolio of loans to firms and households.<ref name="ReferenceA">ECB press release, 10 December 2020.</ref>

Second, the ECB introduced pandemic emergency long-term refinancing operations (PELTROs).<ref name="ECB press release, 30 April 2020">ECB press release, 30 April 2020.</ref> The market operations are similar to the TLTRO III, but are conduced in a more fequent basis in order to ensure smooth liquidity provision to the market.

During the pandemic, these monetary responses proved essential. In their absence, a credit crunch would normally have taken place. Indeed, increase in demand traditionally translates in a rise of borrowing costs.<ref name="Altavilla-2023">{{Cite journal |last1=Altavilla |first1=Carlo |last2=Barbiero |first2=Francesca |last3=Boucinha |first3=Miguel |last4=Burlon |first4=Lorenzo |date=2023-05-13 |title=The Great Lockdown: Pandemic response policies and bank lending conditions |url=https://www.sciencedirect.com/science/article/pii/S0014292123001071 |journal=European Economic Review |volume=156 |pages=6–14 |doi=10.1016/j.euroecorev.2023.104478 |via=Elsevier Science Direct}}</ref> Reports from various member states central banks on the matter indicate that loans supply by participating banks has indeed expanded, in line with the ECB policy.<ref name="Barmeier-2023" /><ref name="Castillo Lozoya-2022" /><ref>{{Cite journal |last1=Kwapil |first1=Claudia |last2=Rieder |first2=Kilian |date=2021-03-11 |title=The effects of the monetary policy response to the COVID-19 pandemic: preliminary evidence from a pilot study using Austrian bank-level data |url=https://www.oenb.at/en/Publications/Economics/Monetary-Policy-and-the-Economy/2021/monetary-policy-and-the-economy-q4-20-q1-21.html |journal=Monetary Policy and the Economy Q4/20-Q1/21 |pages=134 |via=Oesterreichische Nationalbank}}</ref> Accordingly, thorough academic studies have confirmed the actual enhancement of financing conditions and the avoidance of credit scarcity.<ref name="Altavilla-2023" /><ref>{{Cite journal |last1=Dwyer |first1=Gerald |last2=Gilevska |first2=Biljana |last3=Nieto |first3=Maria |last4=Samartín |first4=Margarita |date=1 July 2023 |title=The effects of the ECB's unconventional monetary policies from 2011 to 2018 on banking assets. |url=|journal=Journal of International Financial Markets |pages=28 |doi=10.1016/j.intfin.2023.101800 |doi-access=free }}</ref> In fact, the credit to firms attained unprecedented levels when from March to May 2020, it increased by €250 billion on aggregate.<ref name="Altavilla-2023" /> Furthermore, analysts observed  that even non-participating banks (to the TLTROs and PELTROs) benefited from it in parallel manners.