FRANKFURT – The President of the European Central Bank said on Friday that its monetary policy of low-interest rates and purchase of bonds has not harmed the profits of private banks in the area.
Mario Draghi said at the Frankfurt European Banking Congress that as far as bank profitability is concerned, ECB has found little evidence their monetary policy is currently damaging banks.
Several officials from the European banking sector, especially from Germany, have criticized the ECB for maintaining low-interest rates for a long period of time, which, according to them, limits the profitability of their loans.
“Net interest income has remained quite stable over the past two years,” said Draghi, referring to the income statements of European private banks.
“If there are any negative effects of low rates on net interest income in the future, they should be largely offset by the positive effects of monetary stimulus on the other main components of profitability, such as the quality of loans and therefore on loan-loss provisions,” he added.
The Italian economist and former minister of economy said that currently there are no systematic risks at Eurozone level, and in the case of any isolated risks, the defense lies in macro-prudential and macro-prudential policies, and not in changing the monetary policy for the whole area.
He said that in the current situation, backtracking on financial regulation would be an error, as shown by the pre-crisis experience.