Central Banks
ECB’s Nagel Questions Incentives Offered by New Framework
- Narrower rate spread could increase central-bank funding
- Bundesbank president speaks at conference in Konstanz
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European Central Bank Governing Council member Joachim Nagel said the narrower interest-rate spread in the new operational framework might provide undesirable incentives for lenders.
Lowering the spread between the main refinancing and the deposit facility rate to 15 basis points from 50 now “has the potential to reduce the opportunity cost and provide incentives to shift from market to central-bank funding,” Nagel said Thursday.