The positives of negative deposit rates
The ECB charges 0.4 per cent on deposits to stimulate bank lending to individuals and SMEs. But the policy is being re-examined
At its April meeting, European Central Bank president Mario Draghi described himself as having an open mind regarding potentially changing the bank’s negative deposit rate policy. At present, it charges 0.4 per cent on deposits.
The policy is designed to stimulate bank lending to individuals and the SME sector, because if deposits are simply left with the ECB, banks are charged for them. The ECB claims (with some justification) that its negative interest rate policy...
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