D The European Central Bank (ECB) repeatedly points out that its policy of low interest rates and its purchases of bonds combat social inequalities in the euro area. Just two weeks ago, monetary observers published a study proving that monetary policy particularly benefited the poorest segments of society.
This social group would not have money to save, so low interest rates did not matter to them. On the contrary, they would benefit from an accommodative monetary policy, the labor market is booming, they have a job and wages are rising. But now, it is becoming clear that the ECB's monetary policy has many serious side effects that affect the entire society, especially low-income people.
Low interest rates and bond purchases undermine the German welfare state. For the money of social security contributors is gradually losing value, as the caisses can no longer invest the hoarded billions or even pay penalty interest. Last year, Deutsche Rentenversicherung made a loss of interest of 49 million euros for the first time, reported the "Handelsblatt" earlier this week
Social fund reserves cause costs
"For the current year we expect a similar negative value," writes finance chief Wilfried Husmann in an article quoted by the newspaper. Other social funds would have problems to park high cash reserves without losses for customers.
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which collects and distributes contributions to statutory health insurance funds, pays fines of 4.5 million euros to banks holding accounts. In other words, the contributions of employees and employers for 4.5 million euros will be deducted from the funds.
The monetary policy of the ECB therefore indirectly increases the contributions of nearly 32.8 million employees subject to social security contributions that pay monthly – or pay unemployment insurance, on the rise. These are large sums of money, which are stored as reserves in the accounts of the social security funds and do not give rise to anything or even costs. Only the legal pension insurance reported last week a new record in the sustainability reserve.
The nest egg of the statutory pension insurance is bigger than ever
Source: Infografik WELT [19659013] Through a development historically good from the job market, the reserve reached 34.3 billion euros at the end of June. But the money can not be paid in cash to the institutions and deposited in the vault, it must be invested or stored in a bank. And pension insurance has little leeway because it has to invest the most money for twelve months and in a very conservative way.
The European interest rate market has been declining for years
The good economy continues to swell. For short – term investments, banks often do not pay interest anymore, but they ask for money from the investor. This is the case with negative interest rates
The reason is the monetary policy of the ECB. In order for money to enter the real economy, since June 2014, monetary authorities are imposing penalties on banks seeking to accumulate excess liquidity with the central bank. Institutions can not avoid the interbank market. In the past, a bank borrowing money from another bank generally received interest. Now she has to give a helping hand. The Eonia barometer, which indicates the average interest rates of these prices in Europe, is trading in negative territory almost continuously since 2015.
punished
Source: Infografik WELT
Currently, hoarding excess funds costs 0.4% to banks. If banks lend money to other banks, it costs 0.366% to the lender. Excess money has become a hot potato in the financial sector.
Similarly, institutions impose a fine on large investors, such as the health fund or the pension fund, who want to keep large sums for a certain period of time. As it is usually of huge amounts, you have to make big money quickly.
The health insurance is particularly difficult
The compulsory health insurance is doubly pinched. First of all, the health fund, which distributes only the contributions, has to pay penalties. But even individual providers do not immediately spend their clients' money for health services, but must invest cash reserves.
According to Handelsblatt information accumulated in the first six months, the negative interest of six million euros in the AOK community. Allgemeine Ortskrankenkbaden has therefore tried to minimize the damage, in particular by investing part of the funds over the long term
49 million euros of penalty paid by the Pension Insurance 2017
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The pension system once again reveals weaknesses: because of the ECB's zero interest rate policy, annuities pay penalties – and not too tight. There is enough money left.
Source: WORLD / Larissa Keller
Up to now, private health insurers have been the main source of interest for hikers. Private health insurance funds dedicate part of the contributions paid to so-called old-age provisions to prevent customers from suffering excessive price increases at an advanced age. These are invested in the capital market.
The lower the return on money, the more the insurer has to collect contributions from among its members, so that there is enough capital in old age. As a rule of thumb, for every percentage point that their insurance company earns less with their badets, customers will have to expect a premium increase of about ten percent.
Policies call for regulation in light of negative interest rates to detach from investment through social security. But as it is difficult, watch a look at the alternatives. Federal bonds that are considered safe, and in which social funds could put money, are not an alternative. Here, the negative interest rates are even higher. One-year treasury bills are currently posting a negative return of almost 0.7%.
The yields of the Bunds are less than seven years
Source: Infografik WELT
For a period of seven years, investors do not earn more than negative interest on safe German securities. The real estate is tricky because the money is usually long term. Stocks, on the other hand, are risky in the short term and only fully develop their return potential over longer investment periods. [25] Federal Health Minister Jens Spahn (CDU) plans to increase the share of investments in retirement badets started to rethink. Allgemeine Ortskrankenkbaden wants to increase the pension capital ratio to 20%.
Private insurers also reacted by increasing their equity exposure from 4% in 2012 to 7% in 2016. However, it is still very low by international standards
"This rate reversal # 39; interest is late "
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The ECB announces a turnaround. Monetary authorities are ending their controversial bond purchases at the end of the year. Solvecon's chief badyst, Folker Hellmeyer, believes this decision is late.
