European Central Bank governing council member Ignazio Visco told CNBC that the central bank is “technically prepared” to introduce negative deposit rates which would see banks effectively having to pay the ECB to hold deposits, but was aware of the potential “unintended consequences” of such a move.
Visco, an Italian economist and the current governor of the Bank of Italy, said that the bank was “technically prepared to go in that direction” but the decision depended on whether the economy needed further help.
“We all agreed in the council that we have to look with care and in that case we may reduce the [deposit] rate. We think that – and I personally think that, this is effective – the economy now is capable of taking it on board. Technically, we are equipped and ready to intervene. There may be unintended consequences – we know we may have to work on that – and we know how to work on that,” Visco told CNBC on the sidelines of the Group of Seven (G7) meeting in London this weekend.
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