Since I have a decent amount of links, I thought i would do a special Sunday daily commentary. The issue I wanted to highlight is credit and how it gets created. At some point I may make a longer version of this to flesh out the points but what I want to focus on here is the ECB's cutting the interest rate it gives euro areas banks on deposits at the ECB.
When the ECB last met that was the big news, that the ECB would no longer give banks interest on deposits. Some people took it to mean that banks would be forced to increase lending. For example, this story from Reuters quotes a central banker saying just this:
ECB policymaker Josef Bonnici said the plunge in overnight deposits - to 325 billion euros from more than 800 billion a day earlier - was "encou...
As this site is now reader-supported via Patreon, the remainder of this article is only available to subscribers at a specific patronage level. Articles at patronage levels BRONZE, SILVER, and GOLD are denoted by the categories in blue capital letters above the post. Posts categorized DAILY are available to both SILVER and GOLD patrons.
Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.