The European Central Bank needs to stop subsidizing commercial banks and should cut interest payments on the piles of cash lenders got from the central bank on the cheap, Austrian central bank Governor Robert Holzmann said. Commercial banks are sitting on 3.2 trillion euros worth of excess liquidity , parking this at the ECB at a 4% rate, pushing the ECB and many of the euro zone's national central banks deep into the red.
"There’s no monetary policy reason why we should offer this subsidy," said Holzmann, who also sits on the ECB's 26-member Governing Council."It's not acceptable that the current structure puts major burden on the financial outcomes of central banks," Holzmann told Reuters in an interview. "We cannot run deficits without an end in sight, it can’t be the case." At the core of the issue is the ECB's large scale money printing operation, also known as quantitative easing, which was the hallmark of its stimulus efforts over the past decad
European Central Bank Commercial Banks Subsidy Interest Payments Excess Liquidity Quantitative Easing
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