Negative interest rates, a common occurrence in Europe these days, are unpleasant for both banks and clients. And financial institutions have been increasingly transferring the bulk of the burden on to their customers. Some political factions in Germany, however, aren’t happy with the trend and are pushing for adequate protection for the ordinary small saver, who is often their voter too.
Bavarian Leader Wants Berlin to Outlaw Punitive Interest
Germany needs to ban banks from passing negative rates to retail clients and it has to do so with a law. That’s according to Markus Söder, the prime minister of Bavaria, the largest and richest German state, and leader of the Christian Social Union (CSU). The local official with national prominence recently opened a front against subzero rates announcing an initiative in the Bundesrat, the upper house of the federal parliament, to exempt deposits of up to €100,000 from the punitive interest.
According to Söder, negative interest rates do not correspond to the financial culture in the country. German savers are already losing billions due to the low interest rates of the European Central Bank (ECB), he recently told Bild. The German politician thinks a change of course is necessary in terms of interest rate policy at European level. Berlin should make it clear to Christine Lagarde, nominated to become the next ECB president, that negative rates are not a sensible way forward, Söder stressed.
The head of the Bavarian executive power thinks it’s absurd when even banks that have ‘savings’ in their name have to resort to imposing negative interest rates which thus make saving unattractive. “We need a legal ban in Germany that prevents these negative rates from being passed on to small savers,” the official insisted.