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9 Jun 2014
ECB; negative rates insight - BBH
FXStreet (Guatemala) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman commented on the recent actions from the ECB.
Key Quotes:
"The way banks are going to respond to the negative deposit rate will also be closely scrutinized. In Sweden, the negative deposit rate was not really enforced, and in Denmark's experience, the negative rate was not passed through to depositors."
"The ECB's statement indicated that a negative rate would be applied to a broad range of accounts that the ECB maintains, including some government accounts. We remain concerned about the potential unintended and undesirable consequences."
"On one hand, ECB and international officials want European banks to boost their capital cushion. On the other hand, the negative deposit rate seems to act more like a tax that capital cushion, or at least the most liquid part of it."
Key Quotes:
"The way banks are going to respond to the negative deposit rate will also be closely scrutinized. In Sweden, the negative deposit rate was not really enforced, and in Denmark's experience, the negative rate was not passed through to depositors."
"The ECB's statement indicated that a negative rate would be applied to a broad range of accounts that the ECB maintains, including some government accounts. We remain concerned about the potential unintended and undesirable consequences."
"On one hand, ECB and international officials want European banks to boost their capital cushion. On the other hand, the negative deposit rate seems to act more like a tax that capital cushion, or at least the most liquid part of it."