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TLTRO Spillovers Outside the Euro Area

Author

Listed:
  • Carolina Lopez-Quiles
  • Mr. Adil Mohommad

Abstract

We examine spillovers from ECB’s TLTROs on European countries outside the euro area. Using individual banks’ balance sheet data, we find that TLTROs lowered funding and lending rates for foreign-owned subsidiaries, especially in emerging market economies. We also find an increase in profitability among foreign subsidiaries and no effects on solvency risk. The effects are sizable--every €1 billion in exposure to TLTROs via parent banks is associated with 0.2 bps reduction in deposit rates and 0.4 bps reduction in lending rates of foreign subsidiaries. This underscores the need to factor euro area monetary policies into policy settings outside the euro area.

Suggested Citation

  • Carolina Lopez-Quiles & Mr. Adil Mohommad, 2025. "TLTRO Spillovers Outside the Euro Area," IMF Working Papers 2025/034, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2025/034
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