Will the three-year refinancing operations give banks an incentive to buy “periphery” eurozone bonds? Not necessarily. Of course banks also have capital difficulties, and these measures don’t necessarily help them on that side. The objective is to ease the funding pressures that banks are experiencing. They will then decide what the best use of these funds is.
One aspiration is to have them financing the real economy, especially small and medium sized enterprises (SMEs). What we are observing is that small and medium sized banks are the ones having the biggest funding difficulties, and they are generally the ones who provide most of the financing for the SMEs.