As unstable markets make it more difficult to raise capital, some banks in the euro zone may find it difficult to repay money borrowed from the European Central Bank, the European Union’s banking watchdog said on Friday.
Banks were holding cash from the ECB’s Targeted Longer-Term Refinancing Operations (TLTRO) worth 2.1 trillion euros ($2.21 trillion) until recently, but they are now repaying them after the central bank increased the borrowing charges on them.
‘Up until 2024, banks must repay sizable amounts of central bank loans. In order to repay central bank loans, several banks will be able to rely on their current liquidity reserves, including central bank deposits,’ in a study on banking risks in the year leading up to June 2022, the European Banking Authority stated.
‘However, some banks might need to increase deposits or issue more debt. The cost of replacing central bank funds is yet to be determined,’ EMA said
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