By Abhishek Singhania 13-09-2019
In: hive-exclusives, Economics Europe Monetary policy Specials

Consequences of the ECB Tiering Mechanism

3 min read

The ECB meeting proved to be tumultuous as feared by many participants. In particular it would appear that the details of the tiering mechanism, meant to mitigate the side effects of negative deposit facility rate (DFR) on banks, could not only disappoint but could also have some unintended consequences.   The ECB Decision The ECB cut its DFR by 10bp and strengthened its forward guidance significantly. In order to offset the side effect of the…

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