The European Central Bank (ECB) is set, in spite of the economic slowdown, your trillion-dollar program to buy government bonds and other public bonds at the end of the year. This has been decided by the European Central Bank in its last meeting of the year formal. A further decision was made in Frankfurt: the key interest rate in the Euro area remains at a record low of zero percent.
of Course, the Central Bank will also reach banks and companies in the Euro-zone is still generous. They will invest proceeds from maturing bonds into the purchase of new securities for the time being, indefinite. On the other, they will leave the key interest rate, probably until at least the early autumn of next year at the historical Low of zero percent.
savers in any case, higher interest rates can removing make-up also 2019. Commerzbank chief economist Jörg Krämer expects an increase in the key rate even in 2020. At most, the interest rate for deposits from banks with the ECB might increase in the next year from the current figure of minus 0.4 percent to minus 0.2 per cent – would be in order but still negative.
there are Now at the ECB, observers say, more mind games for long-term cheap loans, so-called long-term tender. Critics consider them as “disguised aid policy”, especially for banks in Italy.
The ECB Toolbox is not empty
Draghi had already said in October that the ECB had even after the end of the bond program over other options for action, should the Outlook for growth and Inflation deteriorate. The tool box for the instruments of monetary policy is still “legal”. Bundesbank President Jens Weidmann has warned against it again and again, the “more-than-generous monetary policy” gradually in the direction of normalization.
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, The Central Bank will end only since March 2015 running program for the purchase of government bonds and public bonds. So you wanted to depress yields and lending to banks in the Euro area to boost. After Draghi’s Conviction succeeded. In the meantime she had bought for 80 billion euros in the month, since September there are only 15 billion. Until the end of the year you will have a bond with a volume of around 2.6 trillion euros in its books brought in.
The ECB will buy in 2019, just more bonds, because it wants to reinvest the proceeds from maturing securities. You could also give again a long-term line of credit, a new long-term tender (TLTRO). The acronym stands for “Targeted Longer-Term Refinancing operations”, German “Targeted long-term refinancing operations”.
2019 could TLTRO.
It would not be a new tool used by the ECB to resort to banks Already 2014 and 2016/2017, they had launched two TLTRO, the observers had referred to as “big Bertha”. The last of the line of credit had a volume of more than 720 billion euros. The money was not interest-bearing borrowed for four years. It is, therefore, for banks is extremely cheap and gives you planning security. In addition, the ECB granted a bonus interest rate when the Bank grants more loans than in the previous year. From 2020, they will have to pay the money from the last Tender according to the report, some of the stresses even in the next year as Commerzbank chief economist Jörg Krämer.
money that the banks then may have to the company, particularly in southern Europe, with lending to. Already for months we are in talks with the ECB about a possible extension or new Tender, had stressed the financial boss of a major Spanish Bank recently.
Sensitive to the current outstanding cost-free ECB loans, the fact that the largest share with around one-third, or almost 240 billion euros will be accounted for by Italian banks. But the liquidity for the repayment of the money may be missing. Because you have bought the Hear solid Italian government bonds – Krämer speaks of the “oodles” and the Italian state, in addition to credits granted. The government bonds were, given the problems the country currently only sell at a loss.
Italy remains the problem child
is not sufficient for the ECB to actually new low-interest long-term loans, were here to view Krämer only to liquidity policy, but also to provide support to the government and the banks in Italy. “But with such a capped policy Help take the ECB to pressure the country to solve its problems on its own”. However, the opposite was necessary if Italy was healthy, and no longer to the stability of the currency Union at risk. DekaBank chief economist of the hangover is expecting even with a long-term loan from the ECB, but not because of possible problems in the case of Italian banks. “That would be a no money policy, a la Italy”.
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decision of the ECJ, the ECB bond purchases do not violate EU-law
The ECB rejects speculation about further TLTRO. For such a decision, it was too early, says ECB chief economist Peter Praet. ECB President Draghi is in any case always try not to be close to Italian banks and to the government in his home country. The ECB for all Eurozone countries to be responsible and not give their policy to individual countries, stressed the President. “Of course, the budget would have to be rules, especially of the highly indebted countries”. Belongs to it is also known to be home to the country dimensions – to the displeasure of Draghi’s -. (with dpa)
