The last decision taken by the ECB, the prolongation of negative interest rates for deposits with an indefinite date, it caused consternation among European banks, which were under severe pressure and limited margins. Mario Draghi has sent a message of hope, during a conference that opened today in Frankfurt on monetary policy, suggesting that the ECB is studying options to reduce the costs paid by banks for the excess liquidity deposited in the ECB. The entity is working on different options to lower the rate paid by banks for excess cash, a measure with which it expects to counteract the undesired effects of its monetary policy.
Draghi has assured that he is willing to delay further the rate hike if the economic situation requires it and has made it clear that the ECB has not yet done so. no concrete proposal for monetary policy for the reduction of deposits, but the objective of the measure would be to return part of the more than 7,000 million euros per year that banks pay in interest to the monetary regulator. In the specific case of Spanish banks, a recent report by Keefe, Bruyette & Woods Europe (KBW) indicates that the main national entities have deposited in Frankfurt something more than 103,000 million euros, representing a cost of 400 million euros .
Draghi has ensured that "if necessary, we should reflect on possible measures that can preserve the favorable implications of negative rates for the economy, while mitigating side effects, if any." The president of the ECB has promised that the Council would analyze, if necessary, measures to mitigate this effect, although he has stressed that in his opinion the weakness of the banking benefits is not an automatic result of the low rates. A staggered deposit rate would allow a bank to pay a reduced charge on a portion of its surplus reserves, being exempt at least in part from paying the regulator the 0.4% annual rate on its surplus liquidity and increasing its profits, at time that would face an unexpected slowdown in growth.
"We are not short of instruments to fulfill our mandate," the Italian banker added during his speech, reiterating that the ECB will adjust the long-term orientation of interest rates in line with the new inflation outlook. In this sense, Draghi has expressed the ECB's willingness to act if the medium-term outlook continues to deteriorate significantly, adding that, in this case, the entity will adopt all monetary policy decisions that are "necessary and proportionate" to the achievement of your goal.
In that same act, the ECB vice-president, Luis de Guindos, has guaranteed that the ECB is able to shield the economy of the euro zone from the effects derived from the changes in the monetary policy of the US, one of the engines of the cycle world financial, after warning that the deterioration in growth prospects increases the risks for financial stability. «The monetary policy actions of the ECB can, in general, shield the economy of the euro area of the side effects of US monetary policy, "he said, referring to the limited indirect effects of the Fed's decisions on inflation and activity in the euro zone. However, it has admitted that US monetary policy is an engine of the global financial cycle, on the basis of which risks for the financial stability of the euro zone may change.
In this sense, the former Spanish minister has anticipated that the deterioration of growth prospects will surely raise the risk of instability in financial markets as a result of the greater concern for the sustainability of sovereign debt and doubts about the profitability of banking. . In this way, a weakening of the growth trajectory will test the ongoing deleveraging, he announced, making the higher financing costs more vulnerable to countries with high public debt ratios.
Guindos has also pointed out that the threats arising from the rise of protectionism in the world and the political uncertainty in Europe can amplify the potential corrections in the risk premia of sovereign bonds. "Looking ahead, as growth prospects moderate, it is imperative that those countries where the debt is still too high rebuild your tax mattresses, "he said.
Regarding banking, Guindos reiterated the importance of the sector intensifying its efforts to overcome the structural challenges it faces, with network adjustments and reductions in personnel costs, as well as improving its digitization and reducing its loan portfolio. doubtful