FRANKFURT – Mario Draghi has engulfed good Thursday of the stakes seemed to restrict its monetary policy. With relative ease, we would say: the wide range of measures taken by the Board of Governors yesterday was voted by “an overwhelming majority,” said ECB President. The debate would be less tense than during past meetings, essentially unopposed on the key issue of negative interest rates. Now, we have evidence that the European Central Bank is independent, it does not affect the outside even when critics are as powerful as the German world economy; who is not shy and dares to experiment on virgin territories; who knows how to surprise. In fact, yesterday surprised.
First, the scope of the measures decided is almost 360 degrees, that is, not limited to a tool but concerns interest rates , purchase of the securities markets, extremely favorable financing for banks to lend to the economy, insurance to the markets that the monetary stimulus will go on and on. Secondly, the measures are massive, such as having increased from 60 to 80 billion monthly purchases of bonds (quantitative easing, QE). Finally, some decisions were by no means provided by the observers. A set of choices that gives two signals: the ECB has no intention of compromising its credibility with hesitant steps; and markets can know that, when the conditions of the economy of the Eurozone and global change, responds accordingly. The effects will be seen in the near future. And it may not necessarily reach all the objectives: at the press conference, Draghi has insisted more than usual on the need for governments to make reforms to boost productivity and enterprises and they change the composition of public budgets to improve competitiveness. But at the same time made it clear in fact that the ECB is not going to wait.
the most surprising decision is the launch of a new phase of funding to banks at zero rates or even negative, called Tltro II. It means that the ECB will organize loans each quarter for a year the refinancing rate, which today is zero; However, if an institution goes beyond a certain level in order to lend to businesses and households, the rate will drop to the level of that applied to deposits that banks maintain with the central bank, that yesterday it was decided to be negative for 0, 40% (from 0.30%). It means that in that case will the ECB to pay interest to the bank that lends money. An institution that lends itself to the economy – said Draghi – will be financed by the Central Bank more than the others and more than favorable conditions.
The interesting thing is that the ECB continues on the road to reward banks that support economic activity and to penalize the other, even if they complain. The decision to bring the deposit rate that banks hold at least from 0.30% to less than 0.40% in Frankfurt institution (that is, must pay) goes in this direction: push to circulate liquidity. Draghi spoke of lenders who have a business model that penalizes them in the presence of negative rates and others who suffer less (and can indeed gain from Tltro II). The negative interest rates, important issue for banks, said the ECB expects “that interest rates will remain at current levels or lower for an extended period of time, well after the time horizon of our asset purchases “that is, even after the end of QE. But he also hinted that we are practically at the minimum limit reached: henceforth, the additional stimulus tools, whether they will be, will be otherwise. The other measures adopted, especially the increase from 60 billion to 80 billion in monthly purchases of securities, qualify for their texture.
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