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FRANKFURT, Jan 24 (Reuters) - The European Central Bank would not embark on a new round of cheap, multi-year loans to euro zone banks unless it could be confident such funds would translate into lower lending rates, ECB President Mario Draghi said on Thursday.
Banks in Italy, Spain, Portugal and Greece have borrowed heavily from the ECB via its Targeted Long-Term Refinancing Operations (TLTROs), which start maturing in 2020.
To avoid a “cliff edge” effect, some members of the ECB Governing Council have been campaigning for a new round of such loans, sources have told Reuters.
No new LTRO programme was on the agenda at present, Draghi told a news conference after the ECB left its policy stance unchanged.
“We want to have TLTROs or LTROs to address cases of existing or likely fragmentation in the monetary policy space,” he said.
“We don’t want to be again in the situation (of the past) ... where we lowered interest rates — policy interest rates — and this was not translated into lower lending rates ... There must be a monetary policy (case) for doing it.” (Reporting By Francesco Canepa; writing by Hugh Lawson; Editing by Catherine Evans)