The member of the Governing Council of the European Central Bank (ECB), Benoit Coeure, is restrained as regards the alleviation of banks from the harmful effects of long-standing low-interest rates.

“I think the intensity of the discussion is astonishing because it focuses on a narrow aspect of our monetary polic”, said Benoit Coeure. “Negative interest rates on deposits were not the biggest problem. Their contribution to the low profits of banks is limited”, added he. According to him, banks should think more about their spending.

As for the slowdown in Eurozone economic growth, the Frenchman said he was very uncertain how long and how strong it would be. Uncertainty, he says, has political reasons. “Growth will come back in the second half of the year only if trade dispute solutions emerge”, said Benoit Coeure.

Negative deposit interest is not the most important factor for interest rates. “If we change something, there must be a monetary reason for that. I do not see a monetary policy argument for tightening right now”, added Benoit Coeure.

The banks in the Eurozone have been paying criminal fines for some time when they accumulate excess liquidity at the ECB. Since March 2016, the deposit rate has been minus 0.4%.

Especially banks in northern Europe complain that long-term negative interest rates will slow their revenue growth. ECB Deputy Prime Minister Mario Draghi recently announced that the institution can look at the side effects of the low interest rates.

The European Central Bank needs to look closely at this trend, according to Benoit Coeure. “For a tightening, banks with high levels of over-liquidity would have won, many of which are in France and Germany, where lending is already high. So far, there is no evidence that negative deposit rates have a bad impact on lending. Rather, it’s the opposite”, added the banker.