Will we see negative deposit rates at the ECB next month?

Discussion in 'Markets & Economies' started by Caput Lupinum, May 14, 2014.

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  1. Caput Lupinum

    Caput Lupinum Well-Known Member Silver Stacker

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    http://www.marketwatch.com/story/ec...ion-praet-2014-05-14?link=MW_home_latest_news
     
    Caput Lupinum, May 14, 2014
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  2. Caput Lupinum

    Caput Lupinum Well-Known Member Silver Stacker

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    Big day tomorrow for the ECB and the global markets in general. Draghi has to ease, no doubt about it but the markets reaction to what action the he takes will be the catalyst. I'm predicting a 10 point basis point drop on the benchmark and also a -0.1 per cent cut to deposit rates.
     
    Caput Lupinum, Jun 3, 2014
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  3. TheEnd

    TheEnd Well-Known Member

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    So are you saying 'Major' problems' may' occur C.L at least in the E.U? Not that I can do anything about it lol! :|
     
    TheEnd, Jun 4, 2014
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  4. LovingtheSilver

    LovingtheSilver Active Member Silver Stacker

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    I see that a press conference will be at 830 ny time, is this the earliest we hear about this announcement or is a statement released before the conference, like what the Fed. Reserve does? All I can find is a live link to the conference.
     
    LovingtheSilver, Jun 5, 2014
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  5. Caput Lupinum

    Caput Lupinum Well-Known Member Silver Stacker

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    I don't think it would cause an immediate crash or anything but if the Euro/US dollar breaches 1.40 and keeps going because the markets were expecting more than what is being offered then it could cause the Eurozone a few headaches and they'll need to take more drastic measures and look towards a QE type program. Just my opinion n' all
     
    Caput Lupinum, Jun 5, 2014
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  6. aleks

    aleks Well-Known Member Silver Stacker

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    aleks, Jun 5, 2014
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  7. aleks

    aleks Well-Known Member Silver Stacker

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    I've got my ron paul gif ready...
     
    aleks, Jun 5, 2014
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  8. aleks

    aleks Well-Known Member Silver Stacker

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    Its official NEGATIVE DEPOSIT INTEREST RATES!

    -0.1%

    [​IMG]
    Source: daily dot
     
    aleks, Jun 5, 2014
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  9. haveblue

    haveblue New Member

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    So where to from here I wonder?
     
    haveblue, Jun 5, 2014
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  10. DanielM

    DanielM Active Member Silver Stacker

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    -.02
     
    DanielM, Jun 5, 2014
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  11. Caput Lupinum

    Caput Lupinum Well-Known Member Silver Stacker

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    Depends what the banks reaction will be to negative deposit rates. I should imagine they had already come up with a plan to cope with such a decision.

    They could still park their money in the ECB and pass on the costs to their customers or anticipating further cuts to the negative deposit rate if the Euro is still too high, invest in riskier assets to secure a return such as government bonds which would artifically push down governments borrowing costs and potentially cause a meltdown the next time economy takes a dive as the banks dump the bonds.

    At the end of the day if the banks don't want to lend money they won't and if people and businesses don't want to borrow they won't.
     
    Caput Lupinum, Jun 5, 2014
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  12. Ronnie 666

    Ronnie 666 Well-Known Member Silver Stacker

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    Ronnie 666, Jun 5, 2014
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  13. JulieW

    JulieW Well-Known Member Silver Stacker

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    I wonder what tune you choose to play as you fiddle whilst Rome burns.
     
    JulieW, Jun 5, 2014
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  14. hawkeye

    hawkeye New Member Silver Stacker

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    To (negative) infinity and beyond!
     
    hawkeye, Jun 5, 2014
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  15. bja

    bja Member Silver Stacker

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    So will this drive the AUD up vs the Euro?
     
    bja, Jun 5, 2014
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  16. Caput Lupinum

    Caput Lupinum Well-Known Member Silver Stacker

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    It's up moderately against the Euro since the annoucement
     
    Caput Lupinum, Jun 5, 2014
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  17. fiatphoney

    fiatphoney New Member

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    Like gold isn't backed by anything, and it doesn't pay interest, you know.


    [​IMG]
     
    fiatphoney, Jun 5, 2014
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  18. Old Codger

    Old Codger Active Member Silver Stacker

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    This is the same as a Bank charging a customer $400 a year to store Gold and Silver in their Safe Custody Vault.


    OC
     
    Old Codger, Jun 5, 2014
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  19. bordsilver

    bordsilver Well-Known Member Silver Stacker

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    Still trying to get my head in gear on this. The ECB is charging other banks to store their Tier 1 cash at their place. But they still need tier 1 capital holdings so what the implication for how they hold these?
     
    bordsilver, Jun 5, 2014
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  20. Old Codger

    Old Codger Active Member Silver Stacker

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    The cash in the ECB will be 'At Call', thus available immediately if required if a 'run' was to take place. Thus it is still Tier1.

    Probably a lot better than holding Greek Treasury Bonds. Or lending to an EU company struggling to pay its wages bill or parts supplier this week. I am no qualified economist, but I cannot see this tactic stopping deflation or generating inflation. What they REALLY want is an inflation rate of 5 or even 10% per annum (or more) .

    I expect that this is just another step on the rocky road to the printing machine. They will try EVERY possible trick before they finally admit defeat, and turn on the switch. Only then will the Germans give up on their opposition to printing. In my view it is inevitable.

    JMO

    OC
     
    Old Codger, Jun 5, 2014
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