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2016-03-05 — wolfstreet.com
The Association of Bavarian Savings Banks, which represents 71 savings banks in the German State of Bavaria, has had it with the ECB's negative deposit-rate absurdity, and it's now instigating a palace revolt... The Frankfurter Algemeine has obtained a memo by the Association of Bavarian Savings Banks that openly encourages its member banks to stash cash in their own vaults rather than depositing it at the ECB and paying the penalty interest of 0.3% to the ECB on these deposits.
...
Punishment interest costs banks more than just the interest they have to pay the ECB: the entire negative interest rate environment is squeezing their profitability. It might work a little better if they could charge savers big-fat negative rates on their deposits, but that would trigger the instant evaporation of cash from the system.
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