Banks Benefit Longer from More Relaxed ECB Rule

0 27,595

The European Central Bank (ECB) has extended by nine months an easing of capital requirements for banks introduced during the corona crisis.

 

With the less stringent requirement, the ECB wanted to ensure that banks would lend enough money to households and companies during the economic crisis.

One such easing was that banks with deposits with the ECB do not have to count them when calculating the ratio of money lent to their own funds.

As a result, banks are stronger on paper, which means that, in principle, they are cheaper when providing new credit.

Initially, the temporary easing would end on June 27, but the ECB believes that the current situation calls for an extension until 2022.

As a result, the central bank for the euro countries follows a different course than central banks in the United States and Switzerland, for example. These will allow the more lenient rules for debt ratios to end this year as planned.

Leave A Reply