While negative interest rates, forward guidance and asset purchases operate predominantly on the term structure of interest rates in the money market and sovereign bond market, TLTROs act specifically on bank credit conditions. These operations provide a very attractive source of long-term funding for banks, which reduces the costs that banks incur when granting a loan to a company or to households.
I detailed the empirical effectiveness of these complementary measures in a recent speech. [9] Overall, when used in combination, these instruments tend to improve the financing conditions for households and firms via lower borrowing rates, which then stimulate economic activity and inflation.