Bank Deposits No Longer Off Limits as ECB Seeks Power to Freeze
- Working paper retains power to stop payments of failing firms
- Payments stay to affect derivative payments for up to 5 days
An illuminated euro currency symbol is projected on to the European Central Bank (ECB) headquarters in Frankfurt.
Photographer: Martin Leissl/Bloomberg
This article is for subscribers only.
The European Central Bank intensified its push for a tool that would hand authorities the power to stop deposit withdrawals when a bank is on the verge of failing.
ECB executive board member Sabine Lautenschlaeger said that bank resolution cases this year showed that a so-called moratorium tool, which would temporarily freeze a bank’s liabilities to buy time for crucial decisions, is needed. Her comment comes as policy makers in Brussels debate how such measures should be designed, and just days after the ECB officially called for the moratorium to extend to deposits as well.