"The overnight deposit rate was cut from -0.2% to -0.3%, to push banks to lend instead of parking money at the ECB."
And here it begins. Banks don't lend reserves. Loans create deposits. Of course most readers don't know that and our 'national broadcaster' knows they don't.
"The cut in the interest rate on overnight bank deposits means that banks in effect pay more to the ECB for holding their reserves.
The policy is designed to make it more profitable for banks to offer loans to consumers and businesses, ensuring a free flow of money."
OK, BBC how does it make it "more profitable for banks to offer loans to customers and businesses"? It doesn't.
"Instead, Mr Draghi said it would go on longer but at the same monthly rate. And the markets expected a bigger cut in the interest rate on banks' deposits at the ECB. It's already below zero which means the banks are being charged to park excess funds at the central bank.
A bigger cut would have given them an even bigger incentive to lend more rather than sit on idle cash."
Nope. Again, when banks lend they create a deposit (an IOU of the bank) and a loan (your IOU to the bank.) The reserves needed pop into existence. Banks lend when there are profit-worthy customers at a certain price of money. This will do nothing, except perhaps slightly reduce bank profits. How people think this will boost lending is beyond me.
This isn't really separate lies - just repeating the same lie over and over!
As the Bank of England say:
"The reality of how money is created today differs from the
description found in some economics textbooks:
• Rather than banks receiving deposits when households
save and then lending them out, bank lending creates
deposits.
• In normal times, the central bank does not fix the amount
of money in circulation, nor is central bank money
‘multiplied up’ into more loans and deposits."
