ECB's three-year LTRO lent banks €489bn to avert a euro-zone squeeze.

By late 2011 euro-zone banks faced towering funding stress as sovereign risk moved into bank balance sheets and interbank lending froze.

On 8 December 2011 the ECB announced three-year Longer-Term Refinancing Operations; the first, on 22 December 2011, drew €489.2 billion from 523 banks, and the second on 29 February 2012 drew €529.5 billion from 800 banks.

The funds were offered cheaply against broadened collateral, so vulnerable banks in Spain and Italy used them most, but much was parked back at the ECB or used to buy sovereign debt rather than lent to the real economy.

Lend long and cheap in one auction to stop a funding crunch

Three-year term funding matched banks' refinancing needs

A fixed 1% rate removed the penalty of rolling short-term funding

Relaxed collateral let weaker banks participate

It bought time for banks to rebuild balance sheets

When banks cannot refinance short-term, give them cheap, long liquidity in one operation — term certainty about funding beats a series of emergency decisions.

The LTROs were the ECB's largest liquidity injection to that point and eased the euro-zone money-market shock, but analysts split on the results: much of the money returned to the ECB deposit facility or went into sovereign bonds, so the operation bought time without resolving the sovereign-bank link.