Friday, February 14, 2014

ECB Considers Negative Interest Rate for Banks

This is another article sent in by a blog reader here. This tells you the velocity of money is too slow and money is not getting into the real economy.

A couple of quotes from the article:

"FRANKFURT--The European Central Bank is "seriously" considering taking its rate on overnight bank deposits into negative territory, a top member of its executive board said Wednesday, adding to mounting speculation that the central bank will act at its next policy meeting to keep the tepid euro-zone economy on track."

"[Negative rates] is something we are considering very seriously," Benoît Coeuré, ECB executive board member, told news agency Reuters in an interview, adding that it is "a very possible option."
"The euro zone relies heavily on bank lending to finance spending, investment and hiring, but the financial crisis and a lengthy recession that ended in the spring of 2013 saddled bank balance sheets with bad loans. Lending by euro-zone banks to households and businesses slumped 2.3% in December, matching the steepest drop in two decades."

No comments:

Post a Comment