Speakers of the session
Impacts of lasting ultra low interest rates on financial institutions and their customers
William R. White
Previously, Economic Adviser and Head of the Monetary and Economic Department, Bank for International Settlements (BIS)
Chief Operating Officer, BNP Paribas
Objectives of the sessionThe objective of this session is to identify the impacts of persistently very low interest rates and abundant liquidity on the credit channel and the financial system. Participants will be invited to discuss the effectiveness of such a monetary policy in a region where the banks are the primary source of funding for the economy. They will also be invited to clearly set out the challenges posed by this environment for banks and insurance companies, as well as their customers.
Points of discussion
What are the impacts of the current monetary environment on banks’ customers (borrowers, savers)?
- What banking activities are benefiting from or being weakened by such a monetary environment?
- Are there impediments to the efficiency of such a monetary policy?
What are the impacts of this monetary environment for banks?
- What are the consequences of a flat yield curve in terms of the profitability of banks in the Eurozone?
- Which banking business models are the most impacted?
- What are the impacts of low profitability of EU banks on financial stability and bank lending?
- How to combine the following objectives: the regulatory requirement to further strengthen banks ‘capital levels, the need to increase their profitability in a European environment of strong competition and the need to increase bank lending to economic agents?
- Can very low interest rates lead to a shortage and a higher cost of lending to SMEs, as Ronald McKinnon has established?