The 3-year LTRO is the ECB's way of telling the European banking system "winter is coming and it may last years". Basically the ECB is helping the banks to get into an all-cash position is they so wish, and keep it that way for 3 years with an option to get out of the position at any time after one year.

It has nothing to do with lending to the real economy and any inflationary effect is minuscule because any asset that could be turned into 3-year cash at the LTRO was also able to be turned into 1-week cash any week, at the same interest rate. So any asset that the LTRO turned into cash was cash already for all intents and purposes. That's what monetary policy through the discount window (American usage) or refinancing operations (European usage) does. It does not increase the monetary mass and therefore, for those who believe in such things as the quantity theory of money, it is not inflationary.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker