ECB Plans Negative Rate on Bank Deposits


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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

By Christian Reiermann, Spiegel International,

European Central Bank executive board member Peter Praet of Germany is expected to recommend that the bank cut its main refinancing rate from the current 0.25 percent to a record low of 0.15 percent when the bank’s Governing Council meets on June 5.

In addition, the bank also wants to introduce a negative rate on bank deposits of -0.1 for the first time in its history. The ECB’s deposit rate is currently at zero, and a further cut would mean that banks would effectively have to pay a fee to park their money. Normally they would be paid interest to do so. Under the new punitive rate, if a bank were to deposit €100 million in a central bank account, the ECB would withhold €100,000. The measure is aimed at encouraging banks to lend money rather than park it at the ECB. It is hoped the move will prevent the kind of credit crunch and freeze in lending seen during the height of the euro crisis, when private and corporate loans all but dried up.

Particularly within the crisis-plagued countries of the euro zone, consumers and companies are still having a difficult time obtaining loans. The lower interest rate could also lead to a drop in the euro’s high exchange rate.

However, sources told SPIEGEL that the Governing Council is not expected to discuss the purchase of further sovereign and corporate bonds. ECB President Mario Draghi is said to want to hold off on these measures in case the rate of price increases continues to fall in the euro zone. It is also reported that the Italian head of the ECB is also considering reducing the number of meetings of the Governing Council, in which monetary policy decisions are made, to just three of four times a year. The goal of the shift is to reduce the amount of speculation among investors and in the media in the run-up to the policy meetings.


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