Europe’s biggest economy is now in a full swing monetary deflation for the first time in our era.
More than 200 banks have now introduced penalty interest rates on retail deposits, some from the first euro, to cover costs incurred by ECB’s negative interest rate for bank deposits. Even mobile Bank N26 has introduced penalty interest rates from €50,000 according to local media.
A comparison website says “144 banks have published negative interest rates for private customers on their website or in their online price list.
13 banks charge fees for the overnight money account, which is usually free. This creates an actual negative interest rate.
According to media reports, some banks and savings banks charge negative interest rates, but do not publish them online.”
Almost all German banks, including the biggest Deutsche Bank, now charge -0.5% for deposits of €100,000 or more. That means such depositors have to pay the bank €500 euros a year for holding and using their money.
Numerous banks have also introduced yearly charges for current accounts, which effectively amounts to negative interest rates if regular deposits are being made.
What’s more, Germany itself has entered deflation, with the inflation rate now standing at -0.2%.
The massive money printing by the European Central Bank (ECB), which now owns some 66% of the Eurozone GDP, seems to have had little effect in Germany.
The reason is perhaps because of something peculiar, with it a bit unclear what exactly has gone on in the German banking sector.