Yesterday (Thursday), Eurozone banks were offered virtually free money from the European Central Bank through the Targeted Long Term Refinancing Offering (“TLTRO”). Guess what happened? An almost universal “non/nein/no/não/geen/óxi thank you,” Mr. Draghi! OK, if we must, we will take just €130 billion of your free money because honestly…, we have no one to lend it to. In total, 306 Eurozone banks took in the TLTRO funds. That’s a bit less than €2.6 billion per bank on an average basis with about 25% of the total amount going to core Eurozone country banks. Ultimately, the weak showing of this tranche of the TLTRO may make it easier for the ECB to convince the Germans to go along with a US style quantitative easing notwithstanding the Maastricht Treaty’s prohibition on monetizing fiscal deficits (a very big NEIN! According to Angela Merkel and Jens Weidmann).
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