So last night, the European Central Bank’s (ECB) 0.00% rate for deposits kicked in. What would you do if your savings account was earning literally zero interest? You’d probably pull it and that is exactly what happened last night. Deposits on hand at the ECB dropped from €808.5 billion to €324.9 billion – that’s a 60% drop!
But this is potentially a positive catalyst for a weathered Eurozone. We anticipate that these funds will be put to work for both public and private lending. But we caution that more borrowing encouraged by cheap money is not a solution for Europe’s debt problems.
The point is: watch what the ECB is doing. Knowing how it interacts with Eurozone countries is pivotal to success.
