A German bank has been making headlines imposing a negative interest rate on savings accounts starting from one euro cent, bringing more criticism on the European Central Bank in Germany, the Eurozone’s economic locomotive.
The Raiffeisen co-operative bank in Fuerstenfeldbruck, in Bavaria, will impose a 0.5% negative interest rate even to the smallest saving accounts as mentioned in their website on Tuesday according to AFP.
The project aims to build a trading platform and is supported, among others by billionaire VC fund Tim Draper.
This is the same rate the ECB charges banks when they keep money with the central bank as banks are obligated to keep money in the central bank following reserve requirements.
The move to impose negative interest rates came from the former president of the European central bank earning him the title “Count Draghila” from Germany’s best-selling newspaper, Bild, showing Graghi as vampires with flangs with the description, ‘Count Draghila is sucking our accounts dry’
Negative rates were already imposed to large accounts above 100,000 euros, but the move from The Raiffeisen bank is touching even the smallest savers.
German banks have been among the hardest hit by ECB negative rates because many savers leave their money with the banks rather than looking for alternative profitable ways of investment.
Bavarian Sparkasse savings bank president Ulrich Netzer told news agency DPA Tuesday
“Our margins are getting smaller all the time,” Ulrich Netzer, Bavarian Sparkasse savings bank president told the German news agency (DPA) on Tuesday.
With the economy chilling – with risks of more borrowers falling behind with repayments – “our room to maneuver and make sufficient profits is being hemmed in”, he included.
Despite the fact that policymakers concurred in September to exclude a portion of banks’ deposits in Frankfurt (EBC) from the charges, the tendency to pass the negative interest rates to the customers has not seen any slow down.
The new trend with negative interest rates has almost affected all the business costumes.
“We don’t plan to pass on negative rates to our millions of customers,” a Commerzbank representative told AFP Tuesday.
However, that has started happening even with the small savers and it is unclear where this ECB experiment will lead despite the fact that they still call bitcoin an experiment.