UK Edition
Deutsche boss: negative interest rates are 'fatal'
Deutsche Bank's chief executive has warned of the "fatal consequences" of the European Central Bank's negative interest rate policy, which he said punished savers and could even undermine the recovery.
John Cryan said the ECB's decision to cut its deposit rate to a record low of -0.4pc and an escalation of its bond buying programme was “working against the goals of strengthening the economy and making the European banking system safer.”
In an article for German newspaper Handelsblatt, he said: “Monetary policy is thwarting goals to strengthen the economy and to make banks safer by now”.
While Mr Cryan praised the central bank for helping to revive the economy following the financial crisis, he said low rates had dire implications for savers and pension plans.
Mr Cryan said the policies also encouraged companies to "refrain from investments due to ongoing uncertainty".
Caution and safety was being punished by the ECB, which effectively charges banks to park cash at the central bank overnight, he said.
The Deutsche boss is the most senior European banker to warn that negative interest rates risk destabilising the bloc's banks.
Larry Fink, the chairman of Blackrock, the world's largest asset manager, has also described the growing trend of negative interest rates as a “worrying”.
He said the policy had "potentially dangerous financial and economic consequences" as investors take bigger risks to generate returns.
Mark Carney, the Governor of the Bank of England, has also said he is "not a fan" of negative interest rates.
"We see the negative consequences of them through the financial system", he said following the publication of the Bank's latest economic healthcheck this month.
The ECB cut all three of its main interest rates in March and ramped up its quantitative easing programme to €80bn a month, from €60bn.