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Monetary policy: ECB demands higher penalty interest from banks


For the first time in three and a half years, the European Central Bank has changed an important interest rate. Banks will have to pay 0.5 percent penalty on their excess money. In addition, new bond purchases are to start.

The European Central Bank (ECB) wants to tackle the weak economy and low inflation with new ammunition: The Governing Council decided at its meeting on Thursday, the deposit rate at which commercial banks park excess money at the central bank, from -0.4 percent to lower now -0.5 percent. In effect, financial institutions are paying a higher penalty rate.

In addition, the central bank wants to resume the controversial bond purchases - and use from November monthly 20 billion euros.

Soon more on SPIEGEL ONLINE.

Source: spiegel

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