ECB Says Banks Need to Face a New Reality

ECB Says Banks Need to Face a New Reality
ECB Says Banks Need to Face a New Reality

Banks that do not adapt to the new reality of low interest rates, competition from fintech companies and tighter regulation will fail, one of the European Central Bank's top supervisors said on Wednesday.

  • "The banks that adapt will thrive, those that don’t will fail," Danièle Nouy, chair of the ECB's supervisory board, said on Wednesday.
  • The euro weakened against the U.S. dollar on Wednesday, a day before the European Central Bank is due to meet
  • Investors are focused on whether ECB President Mario Draghi will give any indications that the central bank will begin tapering its bond purchase program.
  • The ECB may discuss technical changes to its asset-buying scheme but a decision could be deferred until December
  • That is when the bank will also decide whether to extend the scheme beyond March, sources familiar with the discussion said last week.
  • “Ahead of the ECB there’s a little bit of lightening up of the euro. There’s some focus on the possibility that Draghi will push back very aggressively against recent talk of tapering,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp in New York.

(FRANKFURT) - The euro  slipped 0.11 percent against the greenback to $1.0966.

Any signals the ECB plans to reduce bond purchases could roil bond markets globally, and create volatility for currencies.

“If (Draghi) gives any signal in support of tapering at some point, that would be very toxic for fixed income globally,” Franulovich added.

The dollar has been largely tracking U.S. Treasury yields in recent weeks on the view that the Federal Reserve is likely to raise interest rates when it meets in December.

Reuters contribution by Francesco Canepa; editing by Ralph Boulton)

Article by Doc Burkhart, Vice-President, General Manager and co-host of TRUNEWS with Rick Wiles
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