Current accounts at risk. We are surrendering the "accounts"

Who will pay the cost of negative rates? Because now it is clear that someone will have to pay for it. Let us try to understand what is really happening.

You would go to the bank to ask for a loan and then, once you get it, instead of spending the money you have been "entrusted" you would deposit it at the same bank by paying a rate of the -0.50%?

No right? Would you think that would be madness?

An absurdity, isn't it ?! Yet that's what's really happening. This is what the banks in Europe are doing. They take the money from the ECB and instead of investing them, they deposit it with the ECB where they pay the -0.50%.

But why does it happen?

Mario Draghi at the head of the ECB, for years, to encourage investment, it has flooded the liquidity market, a liquidity lent to the banks to use it, lending it to families and companies. However, Only a fraction of that money has come to families and businessesis. The credit institutions have set them aside in deposits that could guarantee their future survival and to heal the budgets dictated by the new EU rules on banking solidity.

Then. If on the one hand Draghi has tried to restart the economy, from the other increasingly stringent regulations on the budgets, dictated by the new control bodies of theEuropean Banking Union, forced the banks to increase their capital parameters, to avoid bankruptcy under the worst conditions. So the best way to avoid trouble for lenders is to lend as little as possible and set aside as much as possible. This led to the absurdity that the liquidity coming from the right hand (ECB) was taken up by the left one (EBA).

Too bad the thinking head should have been the same.

Draghi, in order to push the banks to invest, has decided to penalize the provisions coming to apply a negative rate that has reached its own minimum last September: -0.50%.

This anomalous situation is then added to by the savers who, fearful of the economic situation, are increasing the savings shares held in current accounts, and these are making the balance sheets of the banks themselves even more burdensome.

THE 1500 billions that we Italians, we leave non-interest bearing in account, determine for the banks a cost of 0.50% cost therefore 7.5 bln. THEn Germany the current account billions are around 3000 bln which represent a cost for the German banks of 15 billion euros

Who pays the bill?

So far the banks have done it. But in Germany the wind has changed and many banks are downloading that account on savers, as is the case in Austria, Holland, France, as Unicredit would have liked to do in Italy.

The real questions to be asked at this point are:

Because banks and savers are afflicted by the same illness, that is, from the desire to not invest? How to unlock this vicious circle which is leading to economic stagnation for the whole of Europe?

Because savers and bankers they are willing to lose money leaving money in cash?

And above all, how does it come out of this impasse?

Perhaps the only way at this point could be represented by one strong policy of tax incentives in favor of investments, but the austerity imposed by European politics, which is also blocking Germany, goes in the opposite direction and does not bode well … especially for current accounts …

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