Expectations are running high ahead of next week’s LTRO 2.0 (expected take-up is somewhat smaller than the first time and the previous estimate though, with Reuters poll predicting banks to grab c492 bln euros).

The ECB’s three-year loan operation, along with the BOJ’s unexpected easing, BoE’s QE and commitment from the Fed to keep rates on hold until at least end-2014 may constitute competitive monetary easing, Goldman Sachs argues.

As the moves to ease have been rolled out, we increasingly encounter the argument that such ‘competitive’ (non-coordinated) monetary expansions by developed market central banks are at best ineffective and at worst a zero-sum game at the global level—and perhaps a precursor of something worse, such as a slide towards protectionism.

Goldman’s calculation shows developed market benchmark yields have fallen by an average of around 30 basis points since the Fed started its $400 bln “Operation Twist” stimulus programme in August.

The current phase of easing, the U.S. bank says, is similar to the QE2 from Aug-Nov 2010, which resulted in a sharp spike in oil and commodity prices, a fall in the dollar and the famous “currency war” of competitive devaluation.