## TLTRO Spillovers Outside the Euro Area

_IMF Working Papers, January 31, 2025_

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## Bibliographic details
- Authors: Carolina Lopez-Quiles, Adil Mohommad
- Published: January 31, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229000239.001

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### Summary and research question
- Examines spillovers from ECB’s TLTROs on European countries outside the euro area.
- Uses individual banks’ balance sheet data to identify effects on foreign-owned subsidiaries.
- Focus on funding rates, lending rates, profitability, and solvency risk of foreign subsidiaries.

### Key findings
- TLTROs lowered funding and lending rates for foreign-owned subsidiaries, especially in emerging market economies.
- Increase in profitability among foreign subsidiaries following exposure to TLTROs.
- No effects detected on solvency risk of foreign subsidiaries.
- Quantified effect: every €1 billion in exposure to TLTROs via parent banks is associated with a 0.2 bps reduction in deposit rates and a 0.4 bps reduction in lending rates of foreign subsidiaries.

### Quantitative effects and magnitudes
- Exposure measure and impacts:
  - €1 billion in exposure to TLTROs → 0.2 bps reduction in deposit rates of foreign subsidiaries.
  - €1 billion in exposure to TLTROs → 0.4 bps reduction in lending rates of foreign subsidiaries.
- Effects pronounced in emerging market economies among the sample of European countries outside the euro area.

### Policy implications and recommendations
- Results underscore the need to factor euro area monetary policies into policy settings outside the euro area.
- Policymakers in non-euro European countries should consider spillovers from ECB operations when designing domestic financial and macroeconomic policies.

### Scope, data, and publication metadata
- Data: individual banks’ balance sheet data (used to identify spillovers to foreign-owned subsidiaries).
- Geography: European countries outside the euro area, with emphasis on emerging market economies within that group.
- Publication: IMF Working Papers, Working Paper No. 2025/034, Pages: 25.

*Source: TLTRO Spillovers Outside the Euro Area, IMF Working Papers (2025/034).*

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_Source: https://www.imf.org/en/publications/wp/issues/2025/01/31/tltro-spillovers-outside-the-euro-area-561386_