Pursuant to Article 18.1 of the Statute of the European System of Central Banks and of the European Central Bank, the European Central Bank (ECB) and the national central banks of Member States whose currency is the euro (hereinafter the ‘NCBs’) may conduct credit operations with credit institutions and other market participants, with lending being based on adequate collateral.

On 5 June 2014, in pursuing its price stability mandate, the Governing Council decided to introduce measures to enhance the functioning of the monetary policy transmission mechanism by supporting lending to the real economy. One particular measure announced by the Governing Council in relation to this objective was its decision to conduct a series of targeted longer-term refinancing operations (TLTROs) over a period of two years. In conducting TLTROs, the Governing Council aims to support bank lending to the non-financial private sector, meaning households and non-financial corporations, in Member States whose currency is the euro. This measure does not propose to deal with lending to households for the purposes of house purchases. Eligible lending to the non-financial private sector in the context of this measure thus excludes loans to households for the purpose of house purchases.

In order to facilitate the participation of institutions that, for organisational reasons, borrow from the Eurosystem through the use of a group structure, it is envisaged that participation in TLTROs will be possible on a group basis where there is an institutional basis for group treatment. Group participation will be carried out through one specific group member and in accordance with prescribed conditions. Moreover, in order to address the issues related to the intra-group liquidity distribution, it is ensured that in the case of groups that are established on the basis of close links between members, all group members will have to confirm in a formal way in writing their participation in the group.

Participants in TLTROs will be subject to borrowing limits. They will be entitled to an initial borrowing allowance in respect of the two TLTROs conducted in September and December 2014. The amount that may be borrowed in respect of this initial allowance will be determined on the basis of a participant's total outstanding amount of eligible loans to the non-financial private sector on 30 April 2014. Regardless of whether they participated in the TLTROs conducted in 2014, participants will be entitled to additional borrowing allowances in respect of the following six TLTROs conducted in 2015 and 2016. The amounts that may be borrowed in respect of these additional allowances will be determined on the basis of the amount of a participant's eligible net lending to the non-financial private sector, as calculated in accordance with prescribed criteria over a fixed period, which exceeds a specific benchmark. In setting the applicable benchmark, the Governing Council seeks to balance the need to maintain the targeted nature of the measure with the goal of facilitating sufficient participation in these operations to create a meaningful impact on the monetary policy transmission mechanism.

Commencing 24 months after each TLTRO, participants will have the option to repay amounts allotted in accordance with prescribed procedures.

The objectives of the TLTRO are reinforced by a requirement for mandatory early repayment in September 2016 if the eligible net lending of a participant that has borrowed in the TLTROs, as calculated in accordance with prescribed criteria over a fixed period, is below its applicable benchmark.

Institutions that wish to participate in TLTROs will be subject to certain reporting requirements. The reported data will be used in determining the initial and additional borrowing allowances, in calculating the applicable benchmark, in calculating any mandatory early repayments and for monitoring the impact of the TLTROs. It is further envisaged that NCBs in receipt of reported data may exchange it within the Eurosystem to the extent and to the level necessary for the proper implementation, as well as the analysis of the effectiveness, of the TLTRO framework. For the appropriate validation of the data provided, statistical data collected may be shared within the Eurosystem,