European Central Bank Director Mario Draghi of Italy has announced several measures to combat low inflation and encourage banks to extend more credit.
"Big artillery", "monetary bazooka", or even "the ECB hits hard". The headlines of the press and the Web are not lacking in superlatives to evoke the series of measures which aim to fight against inflation which is too low and to revive growth. Announced Thursday, March 10 by the director of the European Central Bank (ECB) Mario Draghi, they had the effect of an electric shock.
The Italian had promised in December to "carry out a full review of the monetary stance" of the ECB in March, and he did not miss this meeting. Its most emblematic measure was to lower the main key rate, that of bank refinancing, to 0% for the first time in the history of the monetary institution. In other words, financial institutions do not have to repay interest. In addition, the ECB also cut its two other major rates.
Little revolution
Mario Draghi then announced that the European Central Bank was going to increase its monthly debt buyback program from 60 billion to 80 billion euros per month. Small revolution: the institution will no longer be limited, from April, to debts issued by states, it will also be able to acquire securities issued by companies deemed to be of "good quality".
Finally, the institution based in Frankfurt has reduced, as expected, the rate of its deposit facility to -0,4% against -0,3% so far. That is to say, the ECB charges banks that decide to deposit money in its coffers ... thus encouraging them to use the funds rather to grant credits.
"The ECB has done more than meet all expectations. In the end, it does better than what the consensus expected", commented Nicolas Chéron, of CMC Markets France. All these measures must be used to fight against too low inflation and to encourage banks to invest in the real economy at attractive rates.
http://www.france24.com/fr/20160310-bce-baisse-principal-taux-zero-banque-economie-europe-draghi-inflation
The logical continuation of all this:negative interest loans: or pay people to borrow!