Eurozone in CRISIS: Bonanza of cash and rates cuts from Europe’s Bank has misfired
MARKETS were left reeling following the European Central Bank (ECB)’s desperate decision to unleash a round of new stimulus aimed at kicking the flagging eurozone economy into gear.
By LANA CLEMENTS
Express.co.uk
Fri, Mar 11, 2016
French and German stock markets were thrown into panic by yesterday’s shock announcements amid mounting fears policymakers don’t have the power or the tools to drag the continent’s finances out of its black hole.
Dropping interest rates help boost inflation and stimulate investment, but it hits the region’s big banks hard, as it makes it more difficult to profit by lending to each other.
In recent weeks there have been serious concerns over the solvency of some of the region’s biggest banks including Deutsche Bank and Societe Generale.
The ECB yesterday dropped the refinancing rate to zero but held back on taking the rate to negative.
Chief of the ECB Mario Draghi admitted he was concerned over pushing rates too low because of the affect it would have on bank balance sheets.
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