The negative interest rate policy of the European Central Bank (ECB) has been successful, noted Isabel Schnabel, member of the ECB’s executive board, in a speech on Wednesday at the 35th Congress of the European Economic Association.
“Negative rates can have side effects on bank profitability and risk taking.”
“In recent years, the positive effects have dominated.”
“The side effects are likely to become more relevant over time.”
“The pandemic is a wake-up call for governments to encourage innovation and potential growth.”
“There is considerable uncertainty as to the precise level of the turnaround rate and current estimates suggest that the ECB has not reached the effective lower bound.”
EUR / USD has moved lower in the last few minutes and is currently down 0.2% on the day at 1.1809.