The ECB does not see a flight of deposits in the eurozone

The banks from euro zone have not seen massive deposit outflows during the recent financial turmoil, according to Germany’s representative on the board of the European Central Bank (ECB), Elizabeth Schnabelfor which it is still necessary to know the impact of these tensions on credit conditions, as well as the size of the “disinflationary” effect.

“We’ve seen a shift from demand deposits to time deposits, but we haven’t seen a general outflow of deposits from banks,” Schnabel said at an event in Washington organized by the National Association for Business Economics (NABE).

In this sense, the German Executive Director of the ECB admitted uncertainty about the extent of the impact of financial stressbut he stressed that the eurozone banking sector “seems quite resilient”.

“The analytics show that the capitalization looks relatively good, the liquidity position looks good, and a lot of the liquidity is in reserves, so it doesn’t have to be liquidated,” he said.

On the other hand, when asked about the potential impact of the turmoil on the economy, Schnabel stressed that it is important to consider what it will all mean for credit conditions and how the banking sector will respond.

Impact on the economy

In this regard, since they were not directly affected, he ventured that the effect on banks in the euro area would be less than in the US, “although it cannot be ruled out that what is happening will not affect financing conditions and the offer of loans”, key to maintaining business activity and household consumption.

Those financial tensions “will have a disinflationary effect that we would have to take into account”, he pointed out, but without going into the assessment of “how much that effect will be”.