Near Zero: ECB Interest Rate Cuts Hit Savings Hard
http://www.spiegel.de/international/business/germans-worried-as-low-ecb-interest-rates-hit-savings-a-934240.html
As the European Central Bank pushes interest rates to a new low, Germans are growing increasingly concerned about their savings. The money in their accounts is losing value and life insurance policies are yielding lower returns. Investors and central bankers feel trapped. By SPIEGEL staff
Near Zero: ECB Interest Rate Cuts Hit Savings Hard
November 20, 2013 05:32 PM
Jens Weidmann seemed visibly uncomfortable in the role of rock star. The officials with the Frankfurt Cooperative Association had taken great pains to stage last week's appearance of the president of Germany's central bank, the Bundesbank, as a show event.
The lights were dimmed in the "Jahrhunderthalle" convention center, the venue for an upcoming concert by the heavy metal band Motörhead. Trapeze artists hovered in the air as Michael Bockelmann, the association's chairman, set the tone with some sharp words against the European Central Bank (ECB). Because of low interest rates, he said, more and more people are losing interest in saving for the future. Bockelmann left no doubt that Weidmann is the last hope for German savers.
But the much-vaunted central banker began his appearance by tripping on the steps up to the stage, and then he voiced his disapproval of the notion that the magical powers of alchemists could be ascribed to central bankers. And when he finally took a cue from the man who had introduced him and invoked the dangers of a low interest-rate policy, he sounded defensive, almost a little clueless.
He could understand savers' concerns about "creeping expropriation," said Weidmann. He noted that low interest rates are a nuisance, and that relaxed monetary policy also creates risks for banks, insurance companies and the financial markets.