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ECB: Negative interest rates have their uses

Staff writer ▼ | March 3, 2016
Economic growth is urgently needed to help reduce joblessness in the aftermath of the once-in-generation crisis.
Benoit Coeure
Growth   Economic growth is urgently needed in eurozone
Negative interest rates were not responsible for declining bank profitability, ECB governing council member Benoit Coeure said.

"The euro area is still recovering from a once-in-a-generation economic and financial crisis that has left deep scars on the economy," Coeure said, according to remarks prepared for a speech and posted to the central bank's website.

"[The Eurozone] urgently needs higher growth to bring down high unemployment, to deleverage the economy and to raise inflation back to our price stability objective," he added.

Coeure also took aim at criticism of the ECB's negative interest rate policy. Many banks had been able to "more than offset" declining interest revenues via increased lending volumes, lower interest rate expenses and risk provisions as well as capital gains, he said.

Negative interest rates were also "complementary" to the central bank's asset purchase programme which had a clearly positive effect on asset prices, credit risk and intermediation volumes, the policymaker added.

"This has to be set against the direct costs from our measures to net interest margins."