FRANKFURT Oct 3 Charging banks even more to
park their money with the European Central Bank could backfire
if the damage to the banking sector outweighs the benefit for
borrowers, a member of the ECB's Executive Board said on Monday.
"There is a limit to how low interest rates can go -- the
point at which the costs of lower rates incurred by the banking
sector outweigh the benefits," Yves Mersch said.
"(The current) level I would still deem to be 'mildly
negative' but I would shy away from moving into 'wildly
negative' territory. Cutting interest rates even more would come
with increasing risks, as reactions to such cuts might not
always be linear," he added.
(Reporting by Francesco Canepa; Editing by Catherine Evans)