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ECB Policy Impact Positive on Banks
World Economy

ECB Policy Impact Positive on Banks

The European Central Bank’s monetary stimulus has had a mainly positive impact on eurozone banks, but has its own risks, ECB governing council member Francois Villeroy de Galhau said on Monday, Reuters said. Investors should thus lower their expectations for returns from the sector, Villeroy told a news conference. Higher lending volumes have helped offset the impact of low interest rates squeezing net interest margins. Meanwhile, lower rates have also improved borrowers credit profiles, lowering banks’ cost of risk while also lowering their own funding costs. “I would like to point out that the Eurosystem’s monetary policy overall had a positive impact on eurozone banks’ profitability and solvency in 2015,” said Villeroy, who was presenting the annual report of the ACPR French financial sector regulator, which he heads in his role as the governor of the Bank of France. Villeroy said that regulators would keep an eye on banks’ business models to make sure that they are capable of coping in a low interest rate environment.

 

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