Avatar
TheBitcoinManual 2y ago

Something fishy is going on after nearly doubling interest rates in the last year to 7% the Czech National Bank's decision to stop remunerating required minimum reserves and commercial banks are freaking out.

How do you bulk under interest rates you set for yourself? How bad does this get downstream as banks reduce their lending books to reduce risk because they're not getting their "risk-free rate" from the central bank?

Do any Czech plebs know what's going on here? Seems like something is breaking

https://www.reuters.com/business/finance/komercni-banka-expects-hit-end-remuneration-minimum-reserves-2023-09-08/

Reply to this note

Please Login to reply.

Discussion

7c
nobody 2y ago

Fascinating, the games central bankers play. In Canada a couple years ago, the central bank did a sneaky and little known manuever.

Instead of printing more $$ and releasing it to banks, or selling bonds etc...

They introduced a NEW form of payment currency (IOU) that they would exclusively hold with banks to hold as a % of their reserves INSTEAD of holding 100% public currency.

The gaslit everyone by even declaring that it "wasn't money printing, it's a new remittance for banks."

Suddenly the banks had more available $$ to off load right before the interest rates climbed.

Avatar
Karel od Martiny 2y ago

I am czech and I have no idea about this.

Avatar
Karel od Martiny 2y ago

I am Czech and I have no idea about this.

Avatar
Hurvajs Rumcajs 2y ago

In any case the mandatory reserves are not a big chunk of "banks money", but it is also not nothing. 2%. The biggest banks will "loose" between 100-150 million czk (4 to 6 million euro) monthly compared to what they got before.

Not sure if that's alarming. The banks will just lower the deposit rates for plebs and bob is your uncle. There was a drop in the bank stocks, not sure if it's going to last.

Is it easing? Dunno, I'm no expert. But it looks like it is less money being pumped out into the economy. It is fin. repression in any case, the inflation is around 10% and what you get on your savings account was around 5-6% before this step.

https://www.kurzy.cz/zpravy/742611-cnb-prestane-urocit-povinne-minimalni-rezervy-krok-se-zarizne-do-vysledku-bank-vycislila-jej-jiz/

https://nitter.net/LukasKovanda/status/1700180658683891787#m