Two members of the European Central Bank (ECB) have expressed concern at its current negative rate policy, fearing 'unintended consequences.'
In a bid to alleviate some of the pressure from negative rates on bank balance sheets, the ECB introduced a two-tier rate system which exempts a portion of a bank's deposits from the levy. However, data from Pictet Wealth management shows that the exemption would only result in an annual saving of 3.1 billion euros for the entire euro zone banking system.
Visco said that the policy had so far had a "neutral" effect on banks' profits, explaining that margins had been reduced but loans had increased to compensate. He called negative rates "bearable" for the time being but said other policy moves, like asset purchases, should be prioritized in the future.
Meanwhile, Robert Holzmann, ECB member and the current governor of Austria's central bank, told CNBC that negative interest rates are "not a very good idea economically and socially." Holzmann, seen as hawk at the central bank who rallied against the recent package, has called for the ECB to reduce its inflation target to thereby decrease the need for unconventional policy instruments. A relatively new member to the board, he told CNBC: "I decided to be outspoken and to change the atmosphere and tone in which the discussion has taken place so far."
"As a newcomer it's useful to be very outspoken at the beginning, not after half a year, year, because then you become part of the establishment," he added.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
'Addiction' to cheap money will do 'tremendous damage' to the global economyCentral banks around the world are increasingly lowering rates, or moving to negative rates, and analysts warn this could damage the global economy.
Read more »
ECB's Knot wants more wiggle-room around inflation targetThe European Central Bank should define a range around its inflation target to g...
Read more »
South African Reserve Bank chief says debt rating downgrade may be priced inA possible downgrade of South Africa's credit rating on November 1 may already be priced into markets, but structural reforms are still needed, the country's central bank governor has told CNBC.
Read more »
Fed's Williams: Central bank will adjust response to money market volatility 'as appropriate'New York Federal Reserve President John Williams said Thursday the central bank ...
Read more »
BOJ's Amamiya says to continue powerful easing as overseas risks mountBank of Japan Deputy Governor Masayoshi Amamiya said on Friday that the central ...
Read more »