They are the ones that stimulate the consumers and businesses by making sure there is always enough money to go around. Unfortunately, this is beginning to come at the cost of negatively affecting consumers that want to save their money in a bank.
Right now, for any savers keeping money in a bank, it may actually be costing them money instead of helping them save for retirement. Additionally, the amount costing savers is dependent on the level of inflation and could include anything from nominal interest percentages to holding fees. Regardless, it seems that leaving money in any bank related to the ECB is no longer risk free. Instead, placing money in the bank today will yield negative results within a week.
No Investment Money Means No Money to Lend
As citizens, most are aware that if the banks are not holding enough money, they will no longer have enough money to feed the economy. This could eventually resort in welfare payments for people who do not want to work and who are unwilling to relocate and pensions not being paid as expected, as well as effecting the amount workers have for retirement. All of these reasons aim straight back to the economy since it affects consumer spending as well as the money available for businesses to be able to stay afloat.
That being said, banks need to start concentrating on saving themselves by offering low-risk alternatives and keeping a steady flow of money moving through the economy.
What is the ECB's Plan?
Despite all of these negative aspects impacting the ECB, it seems they are still able to borrow low and lend high, which should be impossible with fewer savers keeping their money in their banks. In addition to their ability to still lend high, the bank is planning on entering over 400 billion euros into the economy when the Long Term Refinancing Operation loans which will mature in September of 2018. As it stands, it is unclear where this money will actually come from if the ECB does not change their negative rates to allow savers to actually save money in a bank, rather than lose it.
For now, the ECB needs to become open and straightforward about where the money is coming from and where it is going in order to ease consumer's fears and further improve the European Union's struggling economy. If it doesn't, the money needed to maintain not only the banks, but to also continue providing for the people who live within the European Union, will not be found in time. However, some of the processes being used to bring nations out of this stump are coming under question (such as Bush's and Obama's ridiculous stimuluses), especially when it comes to the European Central Bank (ECB). As many people know, banks are the driving force of an economy.
They are the ones that stimulate the consumers and businesses by making sure there is always enough money to go around. Unfortunately, this is beginning to come at the cost of negatively affecting consumers that want to save their money in a bank.
Right now, for any savers keeping money in a bank, it may actually be costing them money instead of helping them save for retirement. Additionally, the amount costing savers is dependent on the level of inflation and could include anything from nominal interest percentages to holding fees. Regardless, it seems that leaving money in any bank related to the ECB is no longer risk free. Instead, placing money in the bank today will yield negative results within a week.
No Investment Money Means No Money to Lend
As citizens, most are aware that if the banks are not holding enough money, they will no longer have enough money to feed the economy. This could eventually resort in welfare payments for people who do not want to work and who are unwilling to relocate and pensions not being paid as expected, as well as effecting the amount workers have for retirement. All of these reasons aim straight back to the economy since it affects consumer spending as well as the money available for businesses to be able to stay afloat. That being said, banks need to start concentrating on saving themselves by offering low-risk alternatives and keeping a steady flow of money moving through the economy.
What is the ECB's Plan?
Despite all of these negative aspects impacting the ECB, it seems they are still able to borrow low and lend high, which should be impossible with fewer savers keeping their money in their banks. In addition to their ability to still lend high, the bank is planning on entering over 400 billion euros into the economy when the Long Term Refinancing Operation loans which will mature in September of 2018. As it stands, it is unclear where this money will actually come from if the ECB does not change their negative rates to allow savers to actually save money in a bank, rather than lose it.
For now, the ECB needs to become open and straightforward about where the money is coming from and where it is going in order to ease consumer's fears and further improve the European Union's struggling economy. If it doesn't, the money needed to maintain not only the banks, but to also continue providing for the people who live within the European Union, will not be found in
Origin:
http://www.economywatch.com/news/european-central-banks-nega...