Monetary policy does not work: Deutsche Bank boss sees central banks in a dead end
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Frankfurt / Main (AP) - German bank chief Christian Sewing sees the central banks with their Latin at the end.
"The central banks have hardly any funds to effectively dampen a real economic crisis," said Sewing at a bank meeting in Frankfurt. "They have already turned the money on until the very end - above all the European Central Bank."
In view of the increasingly bleak outlook for the economy, the European Central Bank (ECB) has signaled willingness to act. In the room are new bond purchases and a tightening of the penalty interest on bank deposits.
Currently, the ECB requires commercial banks 0.4 percent interest on parked funds. ECB President Mario Draghi had hinted that this negative deposit rate could be further reduced - possibly at the next ECB meeting on 12 September. Puncture is designed to encourage banks to lend more and boost the economy.
"Overall, another rate cut will be lost at the current level. It will only drive asset prices higher and further burden savers, "said Sewing. The ECB interest rate policy already weighs heavily on the industry. "For us, Deutsche Bank alone, the negative deposit rates cost a high three-digit million amount this year. Extrapolated to four years, that's well over two billion euros, "Sewing predicted. "In the long term, these low interest rates are ruining the financial system."
The head of the Swiss bank UBS, Sergio Ermotti, warned that nobody could seriously predict the long-term consequences of the low interest rate policy. For banks, this monetary policy is not good, but the consequences for the entire society should not be underestimated.
Even a staggering of the penalty interest, discuss the currency guardians, would change nothing in the opinion of the Deutsche Bank chief on the basic problem. Sewing's conclusion: "The world is not well prepared for a serious economic crisis - and certainly not for Europe."
Germany must also invest more in its own country to lay the foundations for future growth, warned Sewing. "For years we have been criticized for not investing enough as a country - and this criticism is justified." "It's not about a classic economic stimulus program", it's about technology, better research centers, better education, better data networks.
For a reorganization of the banking industry in Europe, Sewing was basically open. "We need the courage to consolidate in Europe. We also need bigger banks. But the prerequisites must be right. »For example, different insolvency codes in individual European countries were still preventing cross-border mergers.
In the spring Deutsche Bank and Commerzbank had explored the possibility of a merger. However, the two institutes did not see any sense in a merger. The Deutsche Bank then brought a radical corporate restructuring including the removal of thousands of jobs on the way, the Commerzbank Board wants to comment on the future course of the MDax Group in the fall.
Commerzbank CEO Martin Zielke was also open to new mergers: "I would like to push ahead with consolidation in our fragmented market, if possible. I would like to buy a savings bank. »
UBS leader Ermotti considers mergers among Europe's banks to be "inevitable": "Consolidation is the only way the banking system can get out of its problems." Ermotti emphasized, "Size matters." The problem is not that banks are so big that the taxpayer must rescue them in a crisis. The problem is rather that institutions are too small to survive.
Information about the event
Time series ECB interest rates
ECB purchase program
ECB rate decision 25.7.2019
Draghi inaugural statement 25.7.2019
Interview BdB chief executive Krautscheid and others on penalty interest
Biallo at penalty interest
CSU boss Söder in the "Bild" newspaper at penalty rates
Communication Verbraucherzentrale Bundesverband on penalty interest
Eurostat on inflation in the euro area
Federal Statistical Office on Inflation Germany