Negative rates for banks have costs. Jean Pierre Mustier, CEO of Unicredit and new president of the European Banking Federation, makes a shocking proposal that could make more than one current account holder turn up their noses: pass the burden of these costs on to customers in order to ensure "maximum efficiency" of the ECB's monetary policy.
“It would be extremely important that negative rates do not stop on bank balance sheets – Mustier said – It is important for the ECB to tell the banks, “please pass the negative rates on to your customers”, naturally protecting small customers with deposits of less than 100 thousand euros”.
During his debut speech at the EBF, the French manager explained that "if you have negative rates you need to have the most efficient transmission mechanism" and the effects must be "gradually passed on to customers" because "this is the only way to maximize the transmission mechanism, if you want to have the full impact of monetary policies”.
What would happen if Mustier's request were accepted? By pouring their money into the current account, customers do not pay anything to date, except for management costs. By applying the negative rates on the accounts instead, customers with current accounts of over 100 euros would be forced to pay money to leave their cash in the bank. As if they were paying the rent on a house.
Not only that, Mustier doesn't limit himself to current accounts, but also talks about loans. According to him, it shouldensure that bank loans are given at the most efficient rate to customers” and therefore in the context of quantitative easing, the ECB should buy "bank bonds". "Thus the lowest cost of funding" for banks "could be passed on to customers".
The Eurotower “supervises the banks and knows the risks of the banks – underlined the president of the federation of European banks -. Banks are investment grade, buying senior, senior preferred and even tier2 bonds that are investment grade could make a lot of sense,” he added.
Negative interest rates applied to current accounts are already a reality in Switzerland, Denmark and partly in Germany, but in Italy it is the Civil Code that prohibits them.
