The Head of Deutsche Bank Warns ECB: The Era of Cheap Money in Europe Should End

Deutsche Bank CEO John Cryan called on the European Central Bank (ECB) on Wednesday to change its cheap money policy, warning of the creation of ‘bubbles’ in the stock, bond, and other asset markets.

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– The era of cheap money in Europe should end – despite a strong euro, Cryan said in Frankfurt in a room full of bankers the day before the regular meeting of the ECB’s governing council.

Low key interest rates, negative interest rates on deposits, and an extensive asset purchase program are key instruments the ECB is using to strengthen the eurozone economy after the financial crisis of 2008 and 2009.

So far, the ECB has injected more than 2 trillion euros into the system as part of these measures, which has faced criticism primarily from the notoriously frugal Germans.

Banks are particularly concerned about negative interest rates on deposits, which are intended to discourage them from hoarding money at the central bank and encourage them to lend it to the economy.

The head of Germany’s largest commercial bank warned of the consequences of the cheap money policy. “Today we are witnessing signs of bubbles in more and more parts of the capital market,” claims Cryan.

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He is also concerned about the strong euro. “As positive as it may seem for European confidence, the strong euro worries me,” he said.

He also believes that Frankfurt is the most natural location for the new headquarters of banks preparing to relocate from London following the United Kingdom’s decision to exit the European Union. He maintains that Europe is more stable today despite Brexit and political uncertainty in the U.S.

“It seems that economic indicators today testify to a better state in Europe.”