The LTRO’s purpose, as I understand it, is to buy precious time for the conduct of necessary fiscal reforms and bank restructuring. Unfortunately, the positive effects of the LTRO seem to have been waning recently. The sovereign spreads of the highly-indebted countries are on the rise again, while the abundant liquidity is being hoarded by banks amid little signs of any increase in lending.
I hope that the time bought by the ECB through the LTRO is used wisely, to put an end to the fiscal crises and the resultant financial instability. A natural question at this juncture would be how to consolidate the financial gains achieved so far, and what to do to pull the world economy out of its current troubles.