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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prains's picture

he looks happy to oblige, cough

Buckaroo Banzai's picture

So that's what Chris Kattan is doing nowadays.

bania's picture

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

Hippocratic Oaf's picture

Fuck you, pay me.

-Paulie (Goodfellas)

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.

 

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.

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.

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!

Newsboy's picture

Hi, ECB?

Can I get all my money today, please?

I'll come over in the van.

El Oregonian's picture

ECB = Every

Customer

Burned

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.  

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.

Fuh Querada's picture

Fuck me hard!

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

TahoeBilly2012's picture

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

whatsinaname's picture

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

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.

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?

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.

CrashisOptimistic's picture

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

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.

 

Emergency Ward's picture

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

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.

youngman's picture

Same phone as in the movie Matrix....

Sudden Debt's picture

difference is that there's no exit...

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."

bigdumbnugly's picture

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

NoDebt's picture

I called.  Got voice mail.  Shocker.

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.

Sudden Debt's picture

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

 

yrbmegr's picture

In which direction?  And by what measure?

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?

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??

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...

Sudden Debt's picture

Just like you buy shares from the FED

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....

intric8's picture

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

CaptainSpaulding's picture

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

Emergency Ward's picture

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

GOSPLAN HERO's picture

William has a nail gun.

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.

Dr. Venkman's picture

Call Corky Romano?

Grosvenor Pkwy's picture

Did anybody find an email address?

Billy Sol Estes's picture

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

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...

Fuh Querada's picture

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

oklaboy's picture

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

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.

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.