Euro zone banks have borrowed a record EUR 1.31 trillion (USD 1.47 trillion) from the European Central Bank, taking advantage of negative interest rates to meet growing demand for credit from companies hit by the deepest recession in living memory.

CNBC reports that launched six years ago, the ECB’s targeted-longer term refinancing operations (TLTROs) were redesigned earlier this year to help the economy cope with the coronavirus crisis and banks will get the cash for a rate as low as minus 1%.

At EUR 1.31 trillion, take up is above expectations with most analysts predicting a figure just over EUR 1 trillion for the three-year loans.

The negative interest rate means banks that tapped the auction will earn 0.50% for one year with no strings attached and 1% if they simply refrain from shrinking their loan book.

“The take-up increases the ECB’s balance sheet and bolsters its hopes that banks will continue to lend even as the economy shrinks by almost a tenth, helping firms survive until Europe is ready to fully reopen after the crisis,” writes CNBC.

Companies drew down their credit lines at the start of the pandemic. This is in sharp contrast with the bloc’s financial and debt crises a decade ago, when banks withheld credit to protect their balance sheets, exacerbating the downturn.

The ECB, which also supervises the bloc’s biggest banks, has now allowed lenders to run down their buffers without penalties, also in the hope they are inducing lending.