Our second decision was to impose negative interest rates, namely an annualised interest rate of -0.4% on banks’ overnight deposits at the ECB. Here, we face considerable scepticism from the general public as people feel they are being deprived of their “right” to earn positive interest on savings. But one often forgets two things.
Back in 2010, the Seoul Summit of the G-20 committed to “core elements of a new financial regulatory framework (…) as well as measures to better regulate and effectively resolve systemically important financial institutions, complemented by more effective oversight and supervision.” This included the endorsement of Basel III rules on banking supervision, which, among others, raised the quality and quantity of bank capital and liquidity, and constrained the build-up of leverage and maturity mismatches.