Shares in European banks shot up today after the European Central Bank (ECB) announced a new round of bank lending measures, known as targeted longer-term refinancing operations, or TLTROs to their friends.
This is the second round - so naturally it's known as TLTRO II.
ECB president Mario Draghi called TLTRO "loans to banks and additional incentives to lend". But what does that actually mean? Here's everything you need to know.
It's a lot like the Bank of England's Funding for Lending scheme
Under the Funding for Lending scheme, introduced by the Bank of England in 2012, the Bank allowed lenders to borrow from it at low interest rates. In return, they had to report how much they were lending, and to who.
Under the previous TLTRO scheme, banks were able to take a loan worth up to seven per cent of what they were already lending to homes and businesses.
Like last time, banks can participate either individually or on a group basis. If they participate in a group, its benchmark will be based on loan data for the entire group.
We'll be hearing about TLTRO II until 2021
The ECB said the programme will take the form of four operations, beginning in June this year and then every quarter until March 2017. Each one will have a four-year maturity, with the possibility of repayment after two years. That means the final TLTROII will mature in 2021.
Right now, banks will pay zero per cent
The ECB said banks will pay the major refinancing operation (MRO) rate fixed at the time they bid - which at the moment is zero per cent. Those whose lending exceeds their target will be charged at a lower rate for the entire term of the loan - so banks have an incentive to lend.
Banks will pay the MRO rate at the time of bidding, ie zero per cent at current rates. There can be a reduction in that rate that grows with the increasing amount of loans that banks grant. The maximum reduction will go to the deposit rate at the time of bidding. The amount banks can borrow is linked to the loans on their balance sheet. Banks that are very active lenders can borrow more than banks that are active in other activities.
One last thing
It's pronounced "tell-troh". No, us neither.