Bun­des­bank con­cerned about neg­a­tive in­ter­est rates for savers

The Pak Banker - - FRONT PAGE -

The Ger­man cen­tral bank Bun­des­bank is wor­ried that pri­vate savers may soon face neg­a­tive in­ter­est rates on their bank ac­counts, board mem­ber An­dreas Dom­bret warned in a in­ter­view Wed­nes­day.

"The banks and sav­ings banks I speak to want to do ev­ery­thing to avoid that," Dom­bret told Der Spiegel news mag­a­zine.

"But the longer the cur­rent in­ter­est rate en­vi­ron­ment lasts, the higher the pos­si­bil­ity that they might pass on the neg­a­tive rates" to cus­tomers, Dom­bret said.

"As the su­per­vi­sory au­thor­ity, we don't tell the banks what to do. Ev­ery bank and sav­ings bank must de­cide for it­self."

In a bid to push up chron­i­cally low in­fla­tion in the euro area, the Euro­pean Cen­tral Bank slashed its main refi re­fi­nanc­ing rate down to zero this month and low­ered its de­posit rate to mi­nus 0.40 per­cent.

The Bun­des­bank has made no se­cret of its op­po­si­tion to the ECB's de­ci­sion to bring its key rates down so low for such a long pe­riod.

Bun­des­bank pres­i­dent Jens Wei­d­mann said he was not con­vinced by the ECB's lat­est pol­icy moves.

With low in­ter­est rates of­fer­ing lit­tle in­cen­tive to savers and weigh­ing on banks' profitabil­ity, board mem­ber Dom­bret noted that "lots of banks have in­creased their fees to cus­tomers or are think­ing about in­creas­ing them."

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