German commercial banks called on the European Central Bank (ECB) to change the course for interest rates in the near future, Deutsche Welle said. “We can only ask the ECB to remove negative interest rates from the market as soon as possible,” Hans-Walter Peters, president of the Association of German Banks (BdB), said at an annual meeting of the International Monetary Fund (IMF) in Bali yesterday.
The long period of negative interest “is causing real problems,” he pointed out further. According to the head of the Association, European banks have to pay about 7.5 billion euros of annual penalty interest to the ECB, while the US Federal Reserve does not charge such payments. In 2017, the latter paid the banks about 26 billion dollars in interest. In 2018, the volume of payments could reach 45 billion dollars. In such a situation, European banks are left far behind, Peters said.
European banks still receive money from the ECB at zero percent interest, but at the same time, they have to be careful not to create large cash reserves, which arise, in particular, due to customer deposits, the chairman of BdB noted. For excess of free funds placed in the ECB, banks have to pay 0.4% penalty rate. In this case, more and more banks pass the ECB penalty interest on their clients.
When making decisions, the European Central Bank is not obliged to take into account the situation in highly indebted Italy, which has to pay much higher interest rates for new loans than Germany. “We must have an independent policy towards the Italian government,” Peters said.
