Our Senior Policy Fellow Sebastian Mack pushes for increasing the minimum reserve ratio
The European Central Bank’s (ECB) recent decision to cut interest on banks’ required reserves has been a surprise not anticipated by market participants. Remunerating banks’ deposits causes substantial losses for central banks, with German banks benefitting most heavily. The ECB’s new remuneration policy partly limits these losses.
In contrast to many representatives from the banking industry, our Senior Policy Fellow Sebastian Mack welcomes the move. “In order to effectively curb the transfer of wealth from the public sector to the private sector, the ECB should now gradually raise the minimum reserve ratio at the next meetings,” Sebastian Mack argues in the Handelsblatt article. This means that the banks' mandatory deposit is to be higher than before. This would deprive banks of further interest income.
You can read the full article (in German) here.