ECB's Constancio: Negative Rate Policy Has Limits

The video discusses the role of deposit facility rates in expansionary monetary policy, highlighting their impact on money market rates and bank lending. It explores the effects of negative rates, including increased bank reserves velocity and potential policy limits. The discussion covers inflation forecasts, the impact of commodity prices, and the potential financial ramifications of Brexit on EU banks. The video concludes with an overview of macroprudential tools available to the ECB, such as capital requirements and countercyclical buffers.

What is the significance of the velocity of money in the context of the discussed policy?

How does the text suggest the European banks are preparing for potential economic changes?

How do macro prudential tools relate to the monetary policy discussed?

What measures can be taken to address potential bubbles in the housing market?