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Have Questions About The ECB's Unprecedented Negative Deposit Rate? Call This Guy

Tyler Durden's picture




 

Here is the press release from the ECB on its historic, unprecedented and experimental negative deposit rates.

ECB introduces a negative deposit facility interest rate

  • Deposit facility interest rate cut effective as of 11 June 2014
  • Negative rate to apply also to average reserve holdings in excess of the minimum reserve requirements and other deposits held with the Eurosystem

When deciding to lower the key ECB interest rates at its meeting today, the Governing Council of the ECB took the decision to cut the interest rate on the deposit facility to -0.10%.

 

This change will come into effect on 11 June 2014, together with the changes to the interest rates on the main refinancing operations and on the marginal lending facility. The negative deposit facility interest rate will also apply to: (i) banks’ average reserve holdings in excess of the minimum reserve requirements; (ii) government deposits held with the Eurosystem that exceed certain thresholds that will be set in the relevant Guideline to be published by 7 June; (iii) Eurosystem reserve management services accounts if not currently remunerated; (iv) participants’ account balances in TARGET2; (v) non-Eurosystem NCB balances (overnight deposits) held in TARGET2; and (vi) other accounts held by third parties with Eurosystem central banks when stipulated that they are not currently remunerated or are remunerated at the deposit facility rate.

The ECB conveniently adds:

For media queries, please call William Lelieveldt on +49 69 1344 7316.

Meet William:

Something tells us poor William's phone will be ringing off the hook for a long, long time.

 

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Thu, 06/05/2014 - 10:30 | 4826723 prains
prains's picture

he looks happy to oblige, cough

Thu, 06/05/2014 - 10:31 | 4826730 Buckaroo Banzai
Buckaroo Banzai's picture

So that's what Chris Kattan is doing nowadays.

Thu, 06/05/2014 - 10:34 | 4826737 bania
bania's picture

"Le Lie"? Can't make this stuff up!

Thu, 06/05/2014 - 10:37 | 4826748 Hippocratic Oaf
Hippocratic Oaf's picture

Fuck you, pay me.

-Paulie (Goodfellas)

Thu, 06/05/2014 - 10:43 | 4826764 nope-1004
nope-1004's picture

Another picture of a financial whore - selling their souls and any sliver of integrity for money.  This proves the system is 100% insolvent.

 

Thu, 06/05/2014 - 11:04 | 4826826 Divided States ...
Divided States of America's picture

Technically, this ECB negative rates announcement should set off a bank run....but if it forces those people to take their money out of the bank and deploy it into other risk assets such as RE or equities, then the money will remain in the financial institutions hands. I can see people doing that because the entire world right now is focusing on getting any sort of return for their money regardless of the risks. Either way, I think this will set off inflation in everything, especially in items people must need, such as food and fuel and only the rich people can persists in this environment.

Unless of course, the people decide to stash the money under their mattresses OR use it to buy gold, then yes, this will backfire bigtime and lead to an imminent financial collapse.

Thu, 06/05/2014 - 11:10 | 4826838 cocoablini
cocoablini's picture

The Fed and ECB are just following the trend- they say they are enacting negative rates but really that's the market price for their rent money. Nobody wants it. So they are trying to force money out of hiding and get it spent on assets and then people have to borrow money to replace their savings. The banks are not making money holding your shit since no one is borrowing. Its a market price of currency for rent. Less than zero.

Thu, 06/05/2014 - 11:18 | 4826867 Headbanger
Headbanger's picture

And please call him what??   Douche bag!?

I think Mario just threw this idiot out to the mob to test the guillotine while he escapes through the sewer system like the rat he really is!

Thu, 06/05/2014 - 11:53 | 4826987 Newsboy
Newsboy's picture

Hi, ECB?

Can I get all my money today, please?

I'll come over in the van.

Thu, 06/05/2014 - 14:50 | 4827599 El Oregonian
El Oregonian's picture

ECB = Every

Customer

Burned

Thu, 06/05/2014 - 11:54 | 4826984 Panafrican Funk...
Panafrican Funktron Robot's picture

"Negative rate to apply also to average reserve holdings in excess of the minimum reserve requirements and other deposits held with the Eurosystem"

This part may actually end up being more important, there is a fuckton of fiat being stored as reserve holdings (tier 1 bitchez!).  Consider this trade:

  • Borrowing USD at Fed funds
  • Buying EUR/USD.
  • Depositing the EUR as reserve.

Guess what just happened to that trade?  "I wonder" how much that is going to cost to unwind.  Consider the USD implications.  

Thu, 06/05/2014 - 12:59 | 4827231 yrbmegr
yrbmegr's picture

Well, at least we know where not to go for economic forecasts.  You forecast that this will either 1) have no effect on the economy, 2) cause hyperinflation, or 3) cause a financial collapse.  That about covers everything, doesn't it.

Thu, 06/05/2014 - 11:19 | 4826871 Fuh Querada
Fuh Querada's picture

Fuck me hard!

(fashion show manageress in a famous Sex & the City episode)

Thu, 06/05/2014 - 10:40 | 4826759 TahoeBilly2012
TahoeBilly2012's picture

As long as William's response is positive in nature, that's what counts. 

Thu, 06/05/2014 - 10:33 | 4826733 whatsinaname
whatsinaname's picture

He looks kind of sleepless and lost already. Spare him.

Thu, 06/05/2014 - 10:34 | 4826740 NoDebt
NoDebt's picture

Where was that picture taken?  A hotel room?

I have a feeling that's the "Before" picture.

The "after" picture comes whenr the maid discovers him the next morning dead on the floor with a bunch of nails shot into his head.

Thu, 06/05/2014 - 10:30 | 4826725 Sudden Debt
Sudden Debt's picture

I got a question: If it rains for 2 more days next week, will that influence the ECB's decision into changing the policy or will it remain unchanged for at least the rest of the month?

Thu, 06/05/2014 - 10:35 | 4826743 F.A. Hayek
F.A. Hayek's picture

In Europe they have the Swiss Alp downdraft - not the polar vortex. Totally different thing. Regardless, I'm sure it will contribute to debasing the Euro.

Thu, 06/05/2014 - 10:36 | 4826746 CrashisOptimistic
CrashisOptimistic's picture

So if money is paying the ECB to be on deposit there, isn't this a drain of liquidity?

Thu, 06/05/2014 - 10:45 | 4826773 nope-1004
nope-1004's picture

It is a bail out (in) of the banks using public funds.  If you are a banker, you view this as a liquidity infusion.  If you are a common person, you view this as... well.... it doesn't matter what your view is.  Just bend over and take it.

 

Thu, 06/05/2014 - 11:21 | 4826881 Emergency Ward
Emergency Ward's picture

Spahn and Sain and two days of rain are an indication of Global Climate Catastrophe and all bets are off.

Thu, 06/05/2014 - 10:30 | 4826726 earnyermoney
earnyermoney's picture

ringing off the hook? LOL

 

It'll ring and ring but no one will answer. Phone is probably located in an empty office building.

Thu, 06/05/2014 - 10:36 | 4826745 youngman
youngman's picture

Same phone as in the movie Matrix....

Thu, 06/05/2014 - 10:39 | 4826754 Took Red Pill
Took Red Pill's picture

welcome to the real world

Thu, 06/05/2014 - 10:50 | 4826786 Sudden Debt
Sudden Debt's picture

difference is that there's no exit...

Thu, 06/05/2014 - 11:26 | 4826856 Emergency Ward
Emergency Ward's picture

"You have reached the ECB, para espanol pulse uno, para ingles pulse dos, para aleman o frances please hold for the next available operator, wait time is approximately one year."

Thu, 06/05/2014 - 10:31 | 4826728 bigdumbnugly
bigdumbnugly's picture

that looks like the kid i gave a swirly to in middle school...

Thu, 06/05/2014 - 10:31 | 4826729 NoDebt
NoDebt's picture

I called.  Got voice mail.  Shocker.

Thu, 06/05/2014 - 11:08 | 4826832 stacking12321
stacking12321's picture

did you leave a message?

Thu, 06/05/2014 - 11:25 | 4826890 swmnguy
swmnguy's picture

No doubt your call was very important to them and they'll get right back to you as soon as an agent is available.

Thu, 06/05/2014 - 10:34 | 4826738 Sudden Debt
Sudden Debt's picture

And in other news: CHINESE ECOMMERCE TRADE NOW SURPASSED US ECOMMERCE!!

 

Thu, 06/05/2014 - 13:01 | 4827246 yrbmegr
yrbmegr's picture

In which direction?  And by what measure?

Thu, 06/05/2014 - 10:39 | 4826741 Mercury
Mercury's picture

How is this bad?  I don't see where this has to mean that retail depositors can't receive a positive interest rate.

Banks aren't making loans in part because they can park reserves at the central bank and collect interest. In the US at least there was no positive IR for excess reserves before 2008.

Wouldn't this incentivize them to actually lend money which is more or less what banks are supposed to do?

Thu, 06/05/2014 - 12:30 | 4827122 TrumpXVI
TrumpXVI's picture

That's my take as well.  I don't see the exact connection between the negative rate the banks must pay the Central Bank to hold excess deposits and the situation for the retail customers' deposits with the retail banks.  Then again, I can't claim to understand the finer points of banking.....can someone explain??

Thu, 06/05/2014 - 10:35 | 4826742 youngman
youngman's picture

How do I buy stock in the ECB..this is going to be a big money maker for them....I bet they double the amount of meetings and nice lunches in great hotels...

Thu, 06/05/2014 - 10:36 | 4826747 Sudden Debt
Sudden Debt's picture

Just like you buy shares from the FED

Thu, 06/05/2014 - 10:39 | 4826755 l8apex
l8apex's picture

That's funny.  I'm guessing that pic was taken straight off of his linkedin page: https://www.linkedin.com/in/lelieveldt

Jeez, talk about a sacrificial lamb....

Thu, 06/05/2014 - 10:39 | 4826757 intric8
intric8's picture

Is this a webcam shot for some chick he's trying to pick up online?

Thu, 06/05/2014 - 10:50 | 4826774 CaptainSpaulding
CaptainSpaulding's picture

Question: How will this affect my overdraft protection and zero account balance?   Hello!!! Are you there?

Thu, 06/05/2014 - 11:07 | 4826828 Emergency Ward
Emergency Ward's picture

Answer: Penalties will apply doubly to zero balances.  Pay up now!

Thu, 06/05/2014 - 10:53 | 4826791 GOSPLAN HERO
GOSPLAN HERO's picture

William has a nail gun.

Thu, 06/05/2014 - 10:57 | 4826803 orangegeek
orangegeek's picture

NIRP is a tax grab.  That's it, that's all.

 

The euro has already been in a downtrend for four weeks.  It was likely, today, to see the euro move lower.

 

Deflation is already here - and the banksters and gewberment are just fucking around with macros - that all magically appear above 50.

 

The next move to put on the minions is FREE MONEY.  But this won't solve velocity.

Thu, 06/05/2014 - 11:01 | 4826815 Dr. Venkman
Dr. Venkman's picture

Call Corky Romano?

Thu, 06/05/2014 - 11:02 | 4826817 Grosvenor Pkwy
Grosvenor Pkwy's picture

Did anybody find an email address?

Thu, 06/05/2014 - 11:03 | 4826818 Billy Sol Estes
Billy Sol Estes's picture

I want to call him with the Duke Nukem Sound Board. That was always fun in College.

Thu, 06/05/2014 - 11:11 | 4826845 flyonmywall
flyonmywall's picture

Is that the Neel Kashkari of the ECB?

History does not repeat, but it does rhyme....

Of course, he'll run for political office in the future...

Thu, 06/05/2014 - 11:21 | 4826879 Fuh Querada
Fuh Querada's picture

The idea is to force the banks to buy Spanish & Italian government debt, not to lend money into the "economy"

Thu, 06/05/2014 - 11:45 | 4826953 oklaboy
oklaboy's picture

imagine that, busy signal.......

Thu, 06/05/2014 - 11:48 | 4826962 Bemused Observer
Bemused Observer's picture

Lol! They probably picked his name out of a phone book...Now some poor slob in Bumfuck, Europe is getting phone calls from people he doesn't know, asking him shit he has no idea about...

"Where did you get this number? Why are you people calling me?"

Hey, this could very well be their 'exit strategy'...just pick someone's name, and refer all inquiries to them while you make your getaway. Soon to be applied to politics. Our next President? Cletus Fockenpecker from Walla Walla, Washington...Let's call Cletus now and tell him the happy news. And ask him what he intends to DO about all this shit.

Thu, 06/05/2014 - 11:52 | 4826977 I Write Code
I Write Code's picture

So, banks will no longer have access to cash to create real reserves.  In other words, all banks are now nationalized. In other words, all banksters are now using public funds for their games.  This is twenty-first century neo-fascism and you vill love it.

Thu, 06/05/2014 - 11:58 | 4827003 JR
JR's picture

Who can you get to say our way or the highway?  Why,William Lelieveldt.

William Lelieveldt, who will explain why it has to be billions for the bankers and debt and austerity for the peoples, just as he did in the Netherlands in 2004.

When the Netherlands government decided back then on austerity measures “to make it harder for people to get jobless and disability benefits” just as the economy was crashing and people were losing their jobs, the Finance Ministry announced to workers and the unemployed, according to news sources, “that the traditional Dutch system of collective bargaining and social consensus is not suitable for a more competitive world.”

And who was spokesman for this Finance Ministry?  It was William Lelieveldt who in an about face carefully explained to the Dutch that "One of the guiding principles of this cabinet is that people should be more responsible for their own lives."

That’s the way it is in today’s mixed economies where the rulers can cherry pick either socialism or capitalism to suit their bottom line: We get more, you get less, get over it.

…where socialism is “mixed with just enough capitalism to keep tax revenues flowing to pay the welfare tab (both social and corporate welfare)”… where somehow the people end up poorer and collectivized and the bankers end up richer on the backs of the people…ruling the "free" with a whip in their hands.

http://www.nytimes.com/2004/10/01/international/europe/01dutch.html?_r=0

Thu, 06/05/2014 - 12:09 | 4827050 gcjohns1971
gcjohns1971's picture

Wonderful summary.

Thu, 06/05/2014 - 12:08 | 4827048 NoDecaf
NoDecaf's picture

If a "bail-in" is when they confiscate deposit savings, can we then call negative interest rates a "drip-in"?

Thu, 06/05/2014 - 12:13 | 4827065 gcjohns1971
gcjohns1971's picture

The ECB has limited options for creating base money - so-called "high-powered" money.   Options are limited because of the German view of money-printing.  So any base money expansion has too convoluted for the German public to easily identify

The other way to expand money supply is through loans.   If banks will lose excess deposits incrementally via negative interest rates, where do they have to put the money???

 

Money will be looking for a home in stock markets, bond markets, and on the loan book.   If those investments go bad,  Draghi will buy them at face value via LTRO.

Thu, 06/05/2014 - 12:22 | 4827103 Kelley
Kelley's picture

Is he the new Betty Crocker?

Thu, 06/05/2014 - 12:23 | 4827108 Downtoolong
Downtoolong's picture

Meanwhile, on the other side of the pond...

TEMPORARY JOB OPENING

The Federal Reserve Bank is seeking a unique individual for a new middle management position in economic analysis, reporting, and open market operations. Job duties are essentially nothing except taking the fall for about $4Trillion of failed stimulus policies, inflationary counterfeiting of money, excessive monetization of the Federal Deficit, and leaking inside information to Wall Street banks and financial firms.  Less than stellar credentials preferred. Prior experience as a Congressional Staff Advisor, Lobbyist, Chicago BLS employee, or Rogue Trader a plus. In this position you will be required to attend hearings and participate in criminal investigations. However, you will not do any jail time, GUARANTEED. Send resume or CV to Mr. Jones, Marriner Eccles Building, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551

Thu, 06/05/2014 - 13:10 | 4827266 undercover brother
undercover brother's picture

The scheme has now come full circle and the theft is complete.

Thu, 06/05/2014 - 14:28 | 4827533 presidentsarkozy
presidentsarkozy's picture

i just phoned william at 1924 hours UK time .

his phone was not engaged !

His phone WAS ringing !
But he did alas not answer ,

I think he resigned four hours ago .

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