Negative rate policies are not abnormal for the euro

English2019. szept 19.GOVERNOR MATOLCSY100WORDS

Within the Eurozone, we have persistently low inflation, economic weaknesses, a new German malaise and a widening gap between the Northern and Southern members. Reza Moghadam is right in telling us (Financial Times, 25  July 2019) that the ECB should make negative rate policy effective. There are huge global and Eurozone imbalances between money supply and demand. Imbalances can be handled by either allowing a huge economic crisis to unfold, destroying wealth across the board, or by letting the price of money reflect the huge gap between money supply and demand.

The latter is viable and the ECB should be confident to do the job.

Re “Europe’s central bank should make negative rate policy effective”

Governor Matolcsy, MNB, the Central Bank of Hungary

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