TLTROs and collateral availability in Italy

In response to the Covid-19 pandemic, the ECB has adopted a broad set of measures aimed at ensuring that banks maintain wide access to central bank liquidity. In an environment where refinancing operations are conducted under a full allotment regime, it is important to analyse whether collateral scarcity might have influenced participation in the TLTRO-III operations and the contribution made by collateral easing measures. The analysis shows that the collateral availability of the Italian banking system proved to be adequate and it allowed Italian banks to benefit from the favorable conditions introduced under the TLTRO-III programme. For almost all the banks, the absence of collateral easing measures would not have been a restricting factor on a full TLTRO-III take-up. Such interventions have allowed banks to increase the usage of non-marketable assets as collateral and have reduced their reliance on more liquid assets. Empirical evidence suggests that the monetary policy package, together with the fiscal measures adopted by the government, have helped to support bank lending to the real economy.