Tag: Euro

What is the ECB’s Emergency Liquidity Assistance or ELA Program

What is the ECB’s Emergency Liquidity Assistance or ELA Program

Financial Markets Explained
Ever since the recent Greece crisis hit the news headlines, a constant abbreviation "ELA" has been mentioned in the same breathe. For most investors and traders alike, the ELA might initially come across as yet another 'complex financial jargon' (think: EFSF, ESM, etc) put together by the technocrats in the EU Commission and the ECB. The ELA has grown to become an increasingly important tool in the Greece crisis. More importantly, it (the ELA) has allowed Greek banks to remain solvent while an agreement is chalked out by Greece and its lenders. So what is the Emergency Liquidity Assistance or ELA for short? The ELA is one of the many programs run by the European Central Bank and is described as financial support offered by the ECB in 'exceptional circumstances or on a case-to-case basis'...
What is the TLTRO and how is it different to LTRO

What is the TLTRO and how is it different to LTRO

Financial Markets Explained
The ECB recently concluded its first round of TLTRO or targeted long term refinancing operations, which turned out to be anti-climatic. Against an estimated 150bn Euros up for grabs, banks managed to take only 82bn Euros in TLTRO loans from the ECB. The question that might come to one's mind is what is the TLTRO and how is it different from the regular LTRO scheme that is well in place by the ECB. The TLTRO was first announced at the ECB's June 2014 monetary policy meeting where ECB Chief, Mario Draghi unveiled a slew of measures to tackle the high exchange rate and the threat of deflation in the Eurozone. Back then, the ECB allocated a total of €400bn Euros in targeted long term refinancing operations to ease up liquidity in the Eurozone banks. How is TLTRO different to LTRO? The TLT
ECB’s Outright Monetary Transactions (OMT) Explained

ECB’s Outright Monetary Transactions (OMT) Explained

Financial Markets Explained
The European Central Bank had announced their new bond purchase program, earlier in September in an effort to save the Euro currency. ECB Chief, Draghi called it the "Outright Monetary Transactions" or OMT for short. Immediately upon announcing his plans, the EUR surged to a four month high against the USD. So what is the ECB's OMT and how will it help the Euro? Here is an explanation on the program and why the announcement has made the markets more optimistic. The OMT, is a monetary program that provides money or funds to Eurozone nations that are currently struggling with their debts. OMT is an open ended program and does not have any restrictions or limits. It involves the ECB to purchase government bonds in the seconday markets. As you might know, a sovereign government/nation issue...