It Begins: Palace Revolt Against ECB’s NIRP

by Wolf Richter
Wolf Street

If “punishment interest exceeds the pain threshold….”

The Association of Bavarian Savings Banks, which represents 71 savings banks in the German State of Bavaria, has had it with the ECB’s negative deposit-rate absurdity, and it’s now instigating a palace revolt.

In 2014, when negative interest rates first hit Eurozone banks and ricocheted out from there, Germans called it “punishment interest” (Strafzinsen) because these rates were designed to flog banks and savers until their mood improves. But inexplicably, their mood hasn’t improved.

Bank stocks have gotten clobbered as their profits have gotten hit by the negative interest rate environment.

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