The National Bank of Belgium believes that it would not be a good idea to raise the minimum interest rate that banks in Belgium are obliged to pay out on money deposited on savings accounts. In recent weeks several pollical parties have called for the minimum interest rate to be increased. However, in a statement released on Friday morning the National Bank of Belgium says that this could lead "to considerable losses” particularly among smaller savings banks.
Home News
National Bank against raising mandatory minimum interest rate on savings accounts
Published:
Although the interest rate charged to those lending morning to, for example, buy a house has increased, savers have for the most part seen little if any increase in the amount of interest they receive on cash that they have deposited on savings accounts. Last month VRT News examined the rates of interest paid on savings accounts at several different banks and found that none of them were offering rates higher than 0.6%. Meanwhile, the interest rate set by the European Central Bank’s is 3.75%.
Politicians from parties from the government coalition and the opposition have been calling for the banks to be obliged by law to pay higher levels of interest to savers. The banks themselves are receiving a higher rate of interest on the money they deposit with the ECB and also on money they lend to people buying a home. So why shouldn’t savers benefit too?
While the National Bank of Belgium is in favour of “a gradually raising of the level of interest paid on savings”, it does not believe that forcing the banks to raise their interest rates by law is a good idea.
"According to the draft legislation, the banks would be made to pay 1.55% interest. Compared with the current minimum interest rate of 0.11% this would cost the banks an additional 4.5%”.
Not all banks would be hit equally hard. However, with around 300 billion euro currently deposited on Belgian savings accounts a couple of percentage points can make a very big difference.
"Banks that have a high ratio of savings accounts will be confronted with considerable losses”.