Dear
Some months, ago most of European banks complained that the low interest policy of the ECB was damaging their profitability.
But today we read that if the ECB reduces the stimulus, this will increase dramatically the risk of their bad loans.
In conclusion, the problem is not low or high interest rates, because this has never been a liquidity problem. This a solvency problem due to Capital scarcity.
But assuming this has consequences; because it represents a Systemic Change, from a Financial System based in Volume to a Financial System based in Capital Optimization.
We'll talk about them in a future blog.
Looking forward to read your opinions.
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Kind Regards,
Ferran Frances.
