ECB Cuts Deposit Rate To Negative For The First Time Ever

Tyler Durden's picture

Congratulations Europe: you now get to pay your insolvent bank to keep your deposits for you. Today's cuts summarized and largely as expected:

  • Main Refinancing Rate cut by 10 bps to 0.15%
  • Marginal lending facility cut by 35 bps to 0.40%
  • Deposit facility rate cut by 10 bps to -0.10%. As in negative. As in deposits are now charged a fee.

And the ECB leave with the cryptic: "Further monetary policy measures to enhance the functioning of the monetary policy transmission mechanism will be communicated in a press release to be published at 3.30 p.m. CET today."

The full announcement:

At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:

  • The interest rate on the main refinancing operations of the Eurosystem will be decreased by 10 basis points to 0.15%, starting from the operation to be settled on 11 June 2014.
  • The interest rate on the marginal lending facility will be decreased by 35 basis points to 0.40%, with effect from 11 June 2014.
  • The interest rate on the deposit facility will be decreased by 10 basis points to -0.10%, with effect from 11 June 2014. A separate press release to be published at 3.30 p.m. CET today will provide details on the implementation of the negative deposit facility rate.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today. Further monetary policy measures to enhance the functioning of the monetary policy transmission mechanism will be communicated in a press release to be published at 3.30 p.m. CET today.

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Its Only Rock N Roll's picture

Wait until the Fed does this. 

PR Guy's picture

 

 

...and here's the real reason why Draghi needed to cut rates today...

 

https://www.youtube.com/watch?v=zV3UuMOfiaQ

 

 

OceanX's picture

And, this is the type of trend that could spur crypto-currency use...

Headbanger's picture

Sell on the news!

Cause the ECB has reached the end of their rope now.

Sudden Debt's picture

nah, it's only for nerds. Normal people will never use it.

People are just sheep, they'll do absolutly nothing and continue to allow it.

daveO's picture

Sheep= Debt Slaves. They rejoice in the theft.

stocktivity's picture

Rally on!  It's all Bullshit!!!

Sudden Debt's picture

What bothers me about all this shit is this:

 

1. We all know we won't get the pensions like our parents get/got.

2. They told us: YOU BETTER SAVE MONEY FOR YOUR RETIREMENT BOYS!!!

3. And now... saving money is countered...

the pensions won't ever be paid and everybody get's taxes more on savings every day...

 

And nobody revolts. I don't really care, I've got the gold and silver to have a very good pension especially when everybody else will have nothing. But still... WHY DO I PAY 55% ON MY INCOME AND 21% ON WHY I BUY IF I GET NOTHING IN RETURN!!!!????

Its Only Rock N Roll's picture

Yes, seems a bit counter intuitive doesn't it.  When the banks see an outflow of deposits and have capital shortfalls disaster looms. But what the fuck do I know?

Keynesian endgame is interesting to watch.

daveO's picture

They can only steal as long as there are savings. (Neg. rates will hasten the depletion of savings, it's crazy). Then, the debts go bad, anyway.

-.-'s picture

nah, it's only for nerds. Normal people will never use it.

People are just sheep, they'll do absolutly nothing and continue to allow it.

 

And nobody revolts. I don't really care, I've got the gold and silver to have a very good pension especially when everybody else will have nothing. But still... WHY DO I PAY 55% ON MY INCOME AND 21% ON WHY I BUY IF I GET NOTHING IN RETURN!!!!????

 

 

"Talking loud & Sayin' nothing..."

-James Brown-

SWRichmond's picture

The interest rate on the deposit facility will be decreased by 10 basis points to -0.10%, with effect from 11 June 2014. A separate press release to be published at 3.30 p.m. CET today will provide details on the implementation of the negative deposit facility rate.

 

Wait until the Fed does this.

If this is comparable to the Fed charging interest on excess reserves, excess reserves which were placed in the banks' accounts by the Fed in the first place, then yes, when the Fed does this, this will be the signal.  I've been waiting for this obvious sign of desperation for years now.  We have had negative real rates for some time, partially hidden behind false inflation statistics.  Reality keeps intruding. 

Governments desperate for revenue = economy desperate for activity = central banks desperate for Money Velocity.  How's "charging you to save" sound?

daveO's picture

-.10 = the snow flake that triggers an avalanche.

slaughterer's picture

DAX should break 10,000 today on this news.  Nobody is selling it.  

PR Guy's picture

And now we wait for the consequences

 

RealityCheque's picture

Go for it you desperate clowns.

Let The Wurlitzer Play's picture

I guess Europe is in a depression.

 

PR Guy's picture

 

It's been in a depression since 2007

world_debt_slave's picture

Pulling out all the stops to get savers to become speculators.

TumblingDice's picture

Central banks sure do suck.

youngman's picture

why pay interest when you can charge it.....

slaughterer's picture

Draghi convinced the German gov that destroying the € would be good for exports.  Hence the neg deposit rates.  This follows a European parliament campaign that was waged on the message:  € stabilitiy as a chance for the middle class.   Another false lie.  

Wahooo's picture

Wonder when Germany and Russia will tie the knot.

edwinorc's picture

This is of course bearish for gold

asking4it2k's picture

Everything is bearish for gold nowadays. The FED tells their "primary dealers" to sell paper gold to keep the price down on purpose.

The FED wants no one to save and everyone into stocks.

katchum's picture

Deposit outflows will accelerate.

max2205's picture

This should be our que to fill the mattress

buzzsaw99's picture

yeah, i guess they WANT bank runs

daveO's picture

Runs are a good excuse for banking holidays. 

BolanosGhost's picture

I wouldn't be surprised if deposit withdrawal limits or some other similar capital control is announced at that 3:30 sentencing. I only hope we get to see more plywood guillotines! 

 

Edit: Potentially erroneous comment. So is this rate just negative for member bank deposits at the ECB? or does this carry over to individuals' deposits at branch banks? I haven't really read an artilcle that made that clear yet.

Hindenburg...Oh Man's picture

in any case, it was clear that gold would react negtively (although I'm not sure why this should happen with lower rates--stronger dollar?).

Charles Nelson Reilly's picture

And gold gets hit... Makes sense!?!

katchum's picture

first they sell euro for dollar and then buy gold with dollars.

asking4it2k's picture

Wait isnt the ECB is already buying US treasuries via Euroclear in Belgium ??

Ghordius's picture

it would be hard to conceal. the ECB get's audited, you know? shocking, yes. imho this is either Russia or the FED

Ignorance is bliss's picture

Buy Silver and keep it hidden. The cost to the saver = zero. The benefit to the saver = priceless.

B2u's picture

Why -.10% not go all in and make the rate -100%

f16hoser's picture

BANK RUN BITCHEZ"S

BaghdadBob's picture

If, after this, there aren't mass bank runs, then we know 'Their' future plans will never come up against any meaningful resistance. Gold n Silver Bitchez...

Sudden Debt's picture

And when will you receive interest when you take a loan?

Seems just fair to me also...

 

In the beginning when Ireland joined the Euro, they did just that. You could loan 60.000 euro's without interest per person and when you invested it in whatever, you could downpay it with the interest.

Needles to say most people bought cars with that money and the investment culture didn't really took off but I still think it was a good idea.

 

Ghordius's picture

SD, you aren't a bank, are you? so those negative rates don't apply to you

Ireland? do you remember the Anglo-Irish bank tapes?

Sudden Debt's picture

Yeah, how long do you think before it will be passed to their customers??

Do you really think banks will allow depostis and give interest while they need to pay for deposits?

Really?

Do you really think they don't pass the buck? Have they ever not passed the bill to the consumer? Ever?

 

jonytk's picture

they will just not deposit the money in the ecb and put it on sovereign debt, cheap finance for eur gov now.

Ghordius's picture

of course not. they are on the drip. they need healing, which means time

buzzsaw99's picture

give it to me now. ALL CASH BITCHEZ!

NMFP's picture

Another step closer to the abyss