The LTRO, the European Central Bank’s long-term financing scheme was introduced in late 2011 as one of Mario Draghi’s first decisive policy initiatives as ECB president. The move was key to settling nervy market sentiment towards eurozone lenders. As a result, banks’ cost of funding in bond markets fell and lenders that had been frozen out of the market altogether subsequently found it easier to raise money.

But over the past year or so banks have increasingly complained about being awash with liquidity, unable to find commercially viable investment opportunities for the money they have raised from the LTRO and in the markets.  Penalties for Banks Using ECB LTRO