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It's not entirely true that this is caused by the ECB. In fact, only 10% of a typical German bank account (Sichteinlagen) are required to be held with the ECB.
by choeger 5y ago
It's not entirely true that this is caused by the ECB. In fact, only 10% of a typical German bank account (Sichteinlagen) are required to be held with the ECB. For other countries it might be even less (minimal reserve is 1%). Out of these 10% the bank gets charged no interests on the first 6% (six times minimal reserve).
So if you have 100k€ in the bank in Germany, that bank has to pay for 4k€ - that's just 20€ per annum and charges you 250€ (assuming a typical 50k€ exemption). At the same time they can lebd out 90k€ at a market rate of 1.5% to finance some housing. That's 1350€ revenue per annum. So in this simplified, idealized case, the bank just asks you to increase their revenue by 17% out of your own pocket.
The only case when the bank has to pay more is when they don't hand out enough credits and whose fault is that, frankly? Who should carry that risk?
- eru 5y agoYou are free to move your money and business to a different bank, if you don't like it.
- choeger 5y agoYeah right. Because banksters would never all run the same scheme, right? They are so "competitive", you would never find the same conditions on every bank account nation-wide.
- eru 5y agoHow would you figure out whether the conditions are because of 'banksters' colluding or because of something else?
- IkmoIkmo 5y agoIndeed, in addition the central banks don't just charge negative rates, they also allow borrowing at negative rates (-1%) via the TLTRO which means banks are making money borrowing from the ECB, they currently receive more money from TLTRO loans alone than the ECB charges them. In short, low interest rates are obviously a factor, but banks didn't have to do this. They're charging you because they can and because most banks are following suit.