Why the LTRO is not an easy remedy to global problems

EUROPE

Despite a good three month report card, there are still concerns about the ECB programme.

Queues outside the branches of Northern Rock back in 2007 were the enduring iconic images of a financial system that was lurching into crisis. Those queues presaged the near-collapse of the UK banking system; only now are we slowly recovering from that crisis. What we witnessed in the eurozone last December was the corporate equivalent of the panicked queue at the branch. Last autumn, Europe’s banks all but seized up as worries about the sovereign debt crisis prompted money market funds to stop lending to European banks. Borrowing costs for these banks spiked sharply higher. As trust ...