2023-10-13 12:24:07
The banking association is up in arms against a possible increase by the ECB in the minimum reserves that financial institutions must hold with the central bank. The decision to no longer pay interest on minimum reserves, said the President of the Association of German Banks Christian Sewing on Friday at the annual meeting of the IMF and World Bank in Marrakesh.
“We need a framework in Europe that gives banks more leeway to grant loans, that makes capital market financing easier and stimulates growth,” said Sewing, who is also head of Deutsche Bank. An increase in the minimum reserve, on the other hand, would further increase the financial burden on banks and limit their lending options.
Regulation must enable more
In Europe, regulation is needed that makes more possible, said Sewing. “We have to create the right conditions in Europe for globally competitive banks.” New hurdles should not always be created that weaken competitiveness.
Financial institutions in the euro area are obliged to keep a certain amount of money in their account with the respective national central bank. This interest-free minimum deposit for commercial banks is currently one percent of customer deposits. There is currently a discussion at the European Central Bank (ECB) about increasing the minimum reserve requirements. At the end of September, Austria’s central bank chief Robert Holzmann proposed raising the minimum reserve to five to ten percent.
Christian Siedenbiedel Published/Updated: , Recommendations: 14 Published/Updated: Recommendations: 3 Markus Frühauf Published/Updated: , Recommendations: 41
With an increase, the ECB would withdraw liquidity from the financial sector in the euro area, which would further tighten monetary policy in the fight against inflation. Holzmann also justified his proposal by saying that the banks had benefited significantly from the ECB’s unconventional monetary policy during the crisis in recent years.
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