To help money flow more evenly across the currency area, Coeure said the idea of cutting into negative territory the rate the ECB pays banks to hold their deposits overnight was “a very possible option”.
“That is something we are considering very seriously. But you should not expect too much of it,” he said of a negative deposit rate.
The ECB left policy on hold last week but President Mario Draghi put markets on alert for possible action in March, saying the Governing Council would have more information at its disposal by then, including new forecasts from the bank’s staff that will extend into 2016 for the first time.
Read it all from Reuters.
I take this to mean:
a) you give us your money;
b) we lend it out and get interest;
c) but you pay us to hold your money;
d) therefore we get money both from the borrower and from you.
Splendid wheeze. Deflation, anyone?