June 10, 2016 – ShareRadio aired an interview with SEP Senior Fellow Lorenzo Codogno, in which he discusses low interest rate policies and the response from private (German) banks. He acknowledges that, when faced with “deposit rates,” some banks might be tempted to store money in their vaults. This is a costly endeavor, so it will not become a widespread phenomenon. Also, storage facilities are somewhat permanent, while it is inevitable that rates will return to normal at some point. Statements to this effect, therefore, are likely to be political in nature. In particular, German banks have been very critical of the ECB. However, he points out that an alternative to the current negative rate policy does not exist. While the central bank’s policy could be perceived as penalizing German savers, the institution exists to serve the entirety of Europe. In this respect, it is doing a pretty decent job.
- The original interview (in Italian) is available from ShareRadio.