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Webinar – Why is the central bank interest rate so low and why is it so high for the SME’s?
Why is the interest rate for the SME’s so high, while the central bank interest rate is so low? Our Webinar Series We started with
Banking Regulation
Banking regulation is one of the strictest regulations.
In the last 100 years, we did have a central banking system, where base-money is controlled by the central banks and credit-money is created by the commercial banks.
Commercial banks have a de facto franchise from the central banks for the credit-money production. As a result, they are very heavily regulated. The market entry of the new players is very challenging and the banking sector looks like an “old boys club”.
This system allows commercial banks to create huge profits from the money-creation-business. However, from the other side, they have to correspond to the centrally defined banking regulation (Basel banking regulations and national banking regulations)
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Why is the central bank interest rate so low? Why is the interest rate so high for the SME’s?
Central banks have lowered the interest rate and are running massive Quantitative Easing as a response to the coronavirus crisis. But why is the interest