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Monetary policy Europe – Strong demands for ECB exchange rates from Germany News

Wednesday, September 6th, 2017 | Economy

Finance Minister Wolfgang Schäuble said at a banking conference in Frankfurt that the extraordinary monetary policy of the ECB had contributed to overcoming the crisis but was no longer appropriate. "And that is why everyone worldwide wants us to return to normal as soon as possible." Deutsche Bank CEO John Cryan criticized the policy of the ECB to lead to ever-increasing disruption in the markets, to dangerous speculative bubbles and also to disadvantaged European money-houses in international competition.
This was particularly the case between banks in the USA and banks in the USA, explained the British. Because US Federal Reserve Reserve has already abjured the zero interest, banks would have better than their European competitors. "Just in the first half of 2017, the interest rate surplus of American banks has risen by eight percent, but in Europe it fell by two percent," Cryan said. In this way, the ECB's monetary policy contributed directly to the fact that banks' revenues in Europe were declining. "Compared to the time before the financial crisis, the minus is 23 percent."
A recent survey by the Bundesbank recently showed that the mini-interest rates in the euro zone are slowly dumping the water from smaller financial institutions. For example, the five hundred and five-year-old savings banks and Volksbanken are assuming that their pre-tax profit will shrink by 16 percent as measured by their balance sheet total.
The European Central Bank (ECB) has kept key interest rates at a record low of 0.0 percent. It has also been pumping billions of billions into the banking system for about two and a half years to stimulate the economy. Institutions also have to pay penalties if they park overnight at the bank, instead of passing it on as a loan.
As the economy in the euro zone is now significantly better again, the ECB is moving closer to the financial tide. She had dared to take a first cautious step in June by brushing the option of even deeper key interest rates from her monetary policy outlook. Now, economists are expecting further triple steps in this direction, especially since the bond purchase program, which has been invested to 2.3 trillion euros, will only run until the end of December. ECB President Mario Draghi must therefore give the financial markets a signal on how to proceed.
"It is clear to everyone that the ECB is gradually overpowering"
Sparkassen President Georg Fahrenschon demanded that the ECB be allowed to return to its extremely expansive monetary policy, "not always to put it back on the scene", but must finally make a decision. He would like the bank to start "in small steps" to normalize interest rates. Uwe Fröhlich, the head of the Association of the People's and Raiffeisen banks, said that the about 1,000 small institutes attached to his association would wait for the ECB to finally move: "We all know that the ECB is slow coats. "
However, the ECB is currently making the euro's strong price increase, which has grown by more than 13 percent since the beginning of the year. This makes products from the euro area on the world market becoming more expensive and becoming more unattractive. This weakens the growth target. In addition, import goods are becoming cheaper, which should depress inflation. It would be even more difficult for the ECB to reach its target of just under two percent.
(Reuters)

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