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.”

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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,…