Massive deposit outflows from banks are causing uncertainty and are a major topic of discussion. In Europe, the situation is more stable, ECB executive board member Isabel Schnabel told an audience in Washington.
Banks in the Euro area appear to have suffered only minor deposit losses during the turmoil of recent weeks and the uncertainties surrounding financial stability.
«We’ve seen some shift from overnight deposits into time deposits, but we’ve not seen a general deposit outflow of the banks,» European Central Bank executive board member Isabel Schnabel said in remarks at the annual policy conference of the National Association for Business Economics in Washington.
«For now the banking sector looks rather resilient,» she said according to a «Bloomberg» report.
Disinflationary Effect
She said the eurozone won't experience effects in the real economy to the same extent the US will from the recent financial market turmoil. Still, there could be a tightening of credit conditions, she said.
«Directionally it is very clear this would have a disinflationary effect that we would need to take into account,» she said. As to what extent that would be the case «is completely open,» she continued.
Stubborn Core Inflation
The European Central Bank's biggest concern continues to be persistently high inflation. Above all, core inflation, which is still rising, has proved to be much more stubborn than expected.
Overall inflation in the euro area did fall to 8.5 percent in February from 8.6 percent in January. However, the core rate rose to 5.6 percent from 5.3 percent previously.
