ECB Nominee Blames Resistance to Negative Rates on Financial Illiteracy

European Central Bank (ECB) executive board nominee and member of the German Council of Economic Experts, Isabel Schnabel, recently remarked at a European Parliament hearing that “This scapegoating [of the ECB] is extremely dangerous: it may damage the trust in the euro.” Schnabel was speaking out in defense of negative deposit rates being employed as a result of ECB policy. The German economist also remarked that “we cannot expect that the general population understands what the ECB is doing.”

Also Read: ECB President: ’We Should Be Happier to Have a Job Than to Have Our Savings Protected’

Negative, Nominal and Real Rates

While some may indeed be unaware of the difference between nominal and real interest rates, the fact that Isabel Schnabel defends unorthodox monetary policy like NIRP by insulting the average European’s intelligence is a little more than troubling. She remarks: “In Germany, and I guess also in other countries, there’s now this debate about deposit rates turning negative. Nominal rates turning negative.” Schnabel goes on:

As economists we know that what really matters are the real rates. But I would say, I don’t know, 90% of the population are probably not aware that there is such a distinction. And therefore we also need an effort to improve financial literacy.

Even using real rates (rates that account for the projected effects of inflation) endless borrowing and debt creation — and the implementation of lower and lower nominal rates — still signal the same reality. An economy being backed against a wall. The ECB’s current record low deposit interest rate of -0.5% is affecting savers and lending institutions throughout Europe.

ECB Nominee Blames Resistance to Negative Rates on Financial Illiteracy

More Out of Touch Admonitions from ECB Officials

Newly installed ECB president Christine Lagarde also echoed this reality in October when she chided in similar condescending fashion that “We should be happier to have a job than to have our savings protected.” Lagarde also attempted to guilt the Dutch and German governments for holding on to their surpluses. While easy for a well-to-do lawyer like herself to proclaim, those Europeans struggling just to make ends meet and put away a little money for the future might not feel the same. Schnabel augments this aloof, disconnected narrative claiming:

The discussion in Germany is worrying me a lot because it has become quite aggressive … The narrative that the ECB is expropriating the German saver is clearly wrong.

This is interesting, as the expropriation would be rather simple to illustrate, as is the steady devaluation of the euro worrying savers. Aggressive attitudes may seem understandable where rhetoric about attractive employment rates, progressive NIRP policy, and the effectiveness of the ECB often fall on the jaded ears of those working multiple part time jobs to barely keep their heads above water, if at all.

In the view of expert economist Schnabel, the whole resistance to negative rates simply stems from a lack of financial literacy. “Therefore if I am confirmed, I would really make this [education] one of my clear priorities,” she remarked at the hearing. If confirmed, Schnabel would replace Sabine Lautenschlaeger on the executive board. Lautenschlaeger, who opposed continued stimulus, resigned in September.

ECB Nominee Blames Resistance to Negative Rates on Financial Illiteracy 1

The Crypto Alternative

A segment of this financially illiterate “90% of the population” not entirely convinced by Schnabel’s arguments, are looking to cryptocurrencies as a means to hedge against potential economic disaster and the fickle whims of ECB policy. Instead of simply taking Isabel Schnabel’s word, some Germans are holding crypto, and trade on non-KYC/AML peer-to-peer platforms like Also noteworthy is the recent passing of a bill which will allow the country’s banks to deal in crypto starting in 2020. While negative rates could then easily be passed on to holders of bitcoin with established banks, the currency nonetheless is limited in supply (unlike the euro), and can ultimately be withdrawn and used autonomously by the holder, regardless.

What do you think of Schnable’s remarks? Let us know in the comments section below.

Images credits: Shutterstock, fair use.

Want to create your own secure cold storage paper wallet? Check our tools section. You can also enjoy the easiest way to buy Bitcoin online with us. Download your free Bitcoin wallet and head to our Purchase Bitcoin page where you can buy BCH and BTC securely.

Tags in this story
BCH, Bitcoin, bitcoin cash, Christine Lagarde, Cryptocurrency, ECB, economics, European Central Bank, Germany, Isabel Schnabel, Negative Interest Rates, NIRP, Regulation, Savings
ECB Nominee Blames Resistance to Negative Rates on Financial Illiteracy 2
Graham Smith

Graham Smith is an American expat living in Japan, and the founder of Voluntary Japan—an initiative dedicated to spreading the philosophies of unschooling, individual self-ownership, and economic freedom in the land of the rising sun.

Please enable JavaScript to view the

comments powered by Disqus.

About the author

E-Crypto News was developed to assist all cryptocurrency investors in developing profitable cryptocurrency portfolios through the provision of timely and much-needed information. Investments in cryptocurrency require a level of detail, sensitivity, and accuracy that isn’t required in any other market and as such, we’ve developed our databases to help fill in information gaps.

Related Posts

E-Crypto News Executive Interviews

Crypto Scams

Beanstalk Farms Loses $80M In A Massive DeFi Governance Flash-Loan Hack
Beanstalk Farms Loses $80M In A Massive DeFi Governance Flash-Loan Hack
April 23, 2022
Joon Pak Head of Crypto at Prove talks to Us about Crypto Fraud And More
April 11, 2022
Mintable CEO Zach Burks Talks to Us about the Opensea Stolen NFTs and Their Recovery
March 21, 2022
Crypto Crime
Crypto Crime Surges To Record Highs As Thieves Follow Market Buzz – Chainalysis 2022 Report
February 24, 2022
Bots Circumvent 2FA Login At Coinbase And Other Crypto Exchanges In 2022
Bots Have Circumvented 2FA Logins At Coinbase And Other Crypto Exchanges In 2022
February 17, 2022

Automated trading with HaasBot Crypto Trading Bots

Blockchain/Cryptocurrency Questions and Answers

Roundtable Interview-What is the Effect of The Russia-Ukraine War on Cryptocurrency Prices?
March 4, 2022
How Does Bitcoin Casino Work + 2021 Beginner’s Guide
November 8, 2021
How to Buy and Sell Cryptocurrency
November 8, 2021
What Are Bitcoin Futures And How Will They Work In 2022?
November 4, 2021
The Unconventional Guide to Ethereum
October 28, 2021

CryptoCurrencyUSDChange 1hChange 24hChange 7d
Bitcoin28,856 0.24 % 2.35 % 5.02 %
Ethereum1,746.4 0.33 % 4.29 % 13.71 %
Tether1.001 0.25 % 0.08 % 0.03 %
USD Coin0.9989 0.16 % 0.08 % 0.04 %
BNB303.63 0.34 % 2.60 % 1.30 %
XRP0.3860 0.03 % 2.73 % 8.44 %
Binance USD1.001 0.08 % 0.15 % 0.24 %
Cardano0.9566 0.22 % 0.68 % 6.96 %
Solana41.36 0.73 % 6.36 % 20.96 %
Dogecoin0.08194 0.49 % 3.54 % 5.89 %

Bitcoin (BTC) $ 28,888.00
Ethereum (ETH) $ 1,753.33
Tether (USDT) $ 1.00
USD Coin (USDC) $ 1.00
BNB (BNB) $ 303.60
XRP (XRP) $ 0.38721
Binance USD (BUSD) $ 1.00
Cardano (ADA) $ 0.462297
Solana (SOL) $ 41.73
Dogecoin (DOGE) $ 0.082567