The European Central Bank (ECB) defends that revealing what each bank earns with the “deposit facility” mechanism, as Sumar has been demanding for months, would be a “stigma” for this tool, according to the allegations that the Bank of Spain has presented to the National Court the lawsuit that was finally filed by the party led by Yolanda Díaz in September.
In the document with these allegations, to which elDiario.es has had access, the national regulator provides this and other arguments from the ECB, the body that decides the monetary policy of the entire eurozone. This institution, chaired by Christine Lagarde, points out that the transparency demanded by Sumar may “dissuade” financial entities from requesting “the deposit facility,” which “could harm its effectiveness.”
This resource or tool of monetary policy represented a public transfer of 7,805 million euros to the banks of our country in 2023 alone. This is the total figure, but the details of how much each entity (Santander, BBVA or Caixabank) took is unknown. ). This detail is under “secret”, according to the Law. An opacity that attempts to break Sumar’s lawsuit.
The operation of the deposit facility is as follows. The financial institutions of each eurozone country can park their “excess cash”—liquidity that is not mandatory reserves—in the central banks of the Eurosystem (the Bank of Spain in our case), which remunerate this money at the interest rate. of the deposit facility decided by the ECB itself. This is one of the main levers for the “orientation” of monetary policy.
This mechanism has increased banking profits to historical highs with the increases in the central bank’s reference interest rates since 2022 to fight inflation, and will continue to do so in the coming years. Sumar recalls that “the deposit facility” is a public transfer and estimates that it represented 65% of the total profits of Spanish financial institutions last year. In addition, increases in the official ‘price’ of money have also improved the intermediation margins of the sector’s main business, the granting of loans or mortgages.
Sumar’s lawsuit demands transparency about this tool to “protect citizens.” However, the Bank of Spain and the ECB explain to the National Court that “the disclosure of the requested data could harm the effectiveness of the deposit facility and would compromise the achievement of the monetary policy objectives pursued with this instrument, in specifically, the proper functioning of the transmission of the direction of monetary policy to the short-term money markets through widespread and non-stigmatized participation in the facility.”
As the Bank of Spain adds in its presentation of arguments, “the disclosure of information on the use of the deposit facility by specific counterparties could discourage them from using this facility. This is because any use of the deposit facility could be interpreted as an indicator of the liquidity situation of a specific credit institution.”
“Ultimately, the disclosure of the requested disaggregated data could lead to stigmatizing the use of the deposit facility and, consequently, deter some credit institutions from using it, which, in turn, could compromise its effectiveness.” “, states the document presented by the regulator to the National Court.
“The above is especially relevant considering that, as can be deduced from the content of the complaint, the appellants [tres diputados en nombre de Sumar, José María Guijarro, Carlos Martín Urriza y José Manuel Lago Peñas] They would intend to make the requested information public, so that bank clients can take it into account when contracting. The risk for the Union’s monetary policy could thus materialize [monetaria] warned by the ECB”, continues the Bank of Spain.
On the other hand, the text states that banks “have a legitimate commercial interest in preventing third parties from obtaining information about their liquidity and the amounts obtained through the Eurosystem’s monetary policy operations, given that certain information could lead to unjustified speculation about the financial and liquidity situation of the participant and its future participation in the monetary policy operations of the Eurosystem.
The bank tax
One of Sumar’s intentions with his lawsuit is to demonstrate that the temporary tax that the coalition government placed on the financial sector in 2022 for its extraordinary benefits in this cycle of interest rate increases has been paid “with this public transfer.”
“The transfer is 6.5 times higher than the 1,214 million paid by the new tax on credit institutions,” Sumar said in a report published in March of this year.
Likewise, as a result of this “public transfer”, the Bank of Spain recorded losses in its income statement that were offset by provisions. The consequence was that the income of 2,000 million that the Bank of Spain usually makes annually in the Treasury from its profits was reduced to zero and that, Sumar points out, represented a significant impairment in the possibilities of financing public policies.
The bank tax is a commitment included in the agreement of the coalition government between PSOE and Sumar that keeps both parties at odds. This same Wednesday, PSOE, PNV and Junts agreed without Sumar to make it permanent, as explained in this information. Yolanda Díaz’s party registered its own amendments and hopes to be able to convince the socialists in the parliamentary process.
Mandatory reservations
Also in March 2024, the ECB decided to maintain the reserve requirement for banks at a coefficient of 1% (here is the technical explanation). Likewise, the remuneration of these minimum reserves that entities must keep in the Eurosystem – the Bank of Spain in our case, and the rest of the central banks of each euro country: Bundesbank, Banca d’Italia or Banque de France – remains “ without changes at 0%,” the institution points out in its statement.
In this way, the rest of the money that the banks ‘park’ in the central banks is remunerated according to the interest rate of the deposit facility (which is currently 3.25%), with public money.
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