EZB (European Central Bank) lowers interest rates to zero percent

[uzn]

If Banks now borrow money from the EZB they get it without interest rates, if they give out more credits to companies and private people the EZB even pays them more money. If the banks now store money at the EZB they have to pay 0,4 percent on the money they store there.

the source is www.spiegel.de:
http://www.spiegel.de/wirtschaft/unternehmen/europaeische-zentralbank-mario-draghi-geht-auf-volles-risiko-a-1081653.html

[TargeT]

sounds like negative interest if they have to pay .4% for storing money there...... interesting.

interesting move, this will put the "breaks" on a bit & maybe save the EU from serious financial troubles till the fall.

[uzn]

Her in germany some banks like the Sparkasse are already hoarding money in their vaults because they dont want to pay for giving money back to the central bank (EZB). That could be interesting for bankrobbers, there will be more money in the vaults ;)

[Michi]

Wer macht mit? (Witz)
Who's in? (joke)

[MorningSong]

Rick Wiles at Trunews interviewed Terry Sacka and Michael Snyder yesterday and they were mentioning this:

http://www.trunews.com/trunews-031016-michael-snyder-terry-sacka-digital-fiat-currency/

[MorningSong]

I found this, too:



European Central Bank
How the ECB is trying to revive the eurozone

European Central Bank has four key measures to get money into the financial system – what are they and will they work?


What has the European Central Bank done?

Mario Draghi, the ECB president, has announced four key measures:

A cut in the main interest rate used across the eurozone from 0.05% to zero.
A cut in the deposit rate from -0.3% to -0.4%.
Increasing the amount of bonds the ECB is buying, under a process called quantitative easing, by €20bn to €80bn. Crucially, this will now include bonds issued by companies and not just by governments.
New ultra-cheap four-year loans to banks, allowing them to borrow from the ECB at negative interest rates.

Why is this a significant move?

The ECB wants to get money into the financial system by discouraging banks from holding on to deposits and instead lend out money as cheaply as possible to businesses and households.

The 19 countries in the eurozone have had a negative interest rate for deposits since June 2014. But this is the first time the ECB has set the rate at which it lends to banks to zero.

Since June 2014, the ECB has been trying to discourage banks from holding on to savings by cutting the deposit rate to -0.1%. Since then it has cut it to -0.2%, then to -0.3% last December and the rate has now been cut to -o.4%.

By increasing the amount of quantitative easing and the type of bonds it is prepared to buy up, the ECB is also signalling it wants to get more money pumped around the eurozone financial system.

Why is this happening?

The ECB is keen to stimulate the eurozone, against the backdrop of an imperilled global economy. Data in February showed Greece fell back into recession and Italy slowed to near stagnation. Germany, the eurozone’s largest economy, grew by just 0.3%. On top of weak growth, inflation is negative – which can discourage businesses and consumers from spending. Headline inflation dropped to -0.2% in February, down from 0.3% in January. Today, Draghi has said he expects growth of just 1.4% across the eurozone this year, down from 1.7% three months ago.

Do other countries have negative rates?

Sweden’s central bank became the first to lend at a negative rate when in February 2015 it announced a negative repo rate – its main lending rate to commercial banks. Other countries that have negative rates for deposits include Japan, Switzerland and Denmark.

Will it work?

Ultra-low interest rates create difficulties for commercial banks because it makes it harder for financial institutions to lend profitably. The ECB, though, is trying to mitigate the impact by allowing the rate at which banks borrow over the long term to drop into negative territory, too.

Analysts at the consultancy Capital Economics said: “There is no guarantee that its latest ‘bazooka’ will be any more effective than previous ones in securing the strong and sustained growth required to eliminate the threat of deflation in the currency union and allow the peripheral countries to tackle their debt problems. The ECB has belatedly delivered, but it can’t work miracles.”

And Michael Martins, an economist at the business lobby group the Institute of Directors, said the move could prove counterproductive. “Monetary policy is not enough to wake Europe from its slumber. The ECB has felt compelled to act because of the stubborn deflation stalking the continent, but without individual governments stepping up to the plate and implementing more structural reforms, the impact of a further loosening in monetary policy will be limited.”

http://www.theguardian.com/business/2016/mar/10/how-european-central-bank-ecb-trying-revive-eurozone

[KiwiElf]

Starting to take its toll in NZ too, with base interest rate dropping suddenly to a record low of 2.25 % from 3.0 % in just one day (the NZ Reserve Bank predicting it could drop further to 1.95% or less) - good for exporters, not good for savers :facepalm:

http://www.stuff.co.nz/business/industries/77730389/no-change-to-reserve-bank-of-nzs-official-cash-rate-expected-yet

[Violet]

sounds like negative interest if they have to pay .4% for storing money there...... interesting.

interesting move, this will put the "breaks" on a bit & maybe save the EU from serious financial troubles till the fall.

Negative interest is due when banks park the money at ECB/EZB rather than providing loans.

Loans are promoted by this new ECB measure, "the money should roll", economy revival, etc.

But as stated above, some banks are being creative. Storing the money at the ECB costs negative interest, storing it in vaults costs less.

[KiwiElf]

negative interest rates = theft by banks

[mgray]

Markets are struggling to digest what the ECB did on Thursday. Here's (http://wp.me/ppklu-rf) my thoughts.

[TargeT]

negative interest rates = theft by banks

No..

Negative interest rates = How banks would work in the REAL world if they weren't creating money out of thin air (debt based economy).

NORMALLY when someone stores something for you they charge YOU money.. not pay you money.

however it's been that way (debt based money) for so long it's difficult to think that it's wrong.

[ulli]

NORMALLY when someone stores something for you they charge YOU money.. not pay you money.


They will pay you for storage only if they can use your money to play with and thus make more money for themselves.
It all depends whether or not there are desperate people out there who need money, i.e. consumers.
Yet there seems to be a shortage of them, at least in developed countries.

Governments and banks always try to turn the underbelly of humanity into consumers, but the general public has reduced their spending to food, shelter and smart phones at the expense of travel and luxury goods.

[KiwiElf]

But we're not just "storing our money", are we? The banks get the use of it (at hundreds if not thousands of times over what you've deposited). There is a big difference in statically storing your car at a storage yard - (yes, you should be charged for using their space & security), and allowing the storage company to USE the car while it's in storage (and you have no idea HOW it's being used - or abused?). Let's compare apples with apples. ;)

[meat suit]

negative interest rates are actually much better, since money is supposed to represents goods. these goods are in reality mostly deteriorating.
in the positive interest model, the money invested in a box of strawberries magically gains while the strawberries deteriorate...
unless they are planted in good time to make more strawberries

btw. I am invested in biomass willow with an annual gain of 2000%
but that gain is in 'willow' not 'money'