In particular, an important innovation was to set the minimum borrowing rate at 50 basis points below the average interest rate on the deposit facility. This lowered funding costs for bank-intermediated credit, even without a generalised reduction in the main traditional policy rates.
The remarkable expansion in the scale of TLTRO III operations, which have increased by about € trillion during the pandemic, is visible in Chart 1. ECB estimates indicate that TLTRO III liquidity can be expected to boost loan volumes considerably, to the tune of four percentage points cumulatively by 2022, and also contributed to a substantial lowering of lending rates to non-financial corporations.