The ECB requires the banking sector to transfer the extraordinary tax to customers

0

The European Central Bank (ECB) considers that the Spanish tax on banks could jeopardize a smooth transmission of monetary policy measures to the economy in general if the affected entities record low profits or losses at the time it is collected effectively the lien, whose amount may not be proportional to the profitability of a credit institution, as indicated by the institution in an opinion where it also bets that the tax be passed on to customers.

In its assessment, the ECB recalls that the materialization of downside risks in the current environment may significantly reduce debtors’ ability to pay and, therefore, the net effect of the normalization of monetary policy on the profitability of credit institutions it could possibly be less positive, or even negative, over a long time horizon. In this sense, he defends that, given that the determination of the recipients of the temporary lien to total interest and fee income for 2019, these entities may record low profits or losses at the time the levy is actually collected.

“If the ability of credit institutions to achieve adequate capital positions is impaired, this could jeopardize the smooth transmission of monetary policy measures to the economy in general through the banks,” he warns. Likewise, for the ECB, the basis on which the temporary levy would be established does not take into account the entire economic cycle and does not include, among others, operating expenses or the cost of risk therefore, the amount of the temporary lien “could not be proportional to the profitability of a credit institution”.

Thus, as a consequence of the general application of the temporary levy, credit institutions that do not necessarily benefit from current market conditions “could be less able to absorb possible risks to the down from an economic recession“On the other hand, in the opinion of the ECB, a generic provision that establishes that the temporary lien cannot be transferred to the clients of the credit institutions “could generate uncertainty”, as well as related operational and reputational risks for such entities. In this regard, the ECB recalls that it generally expects credit institutions, in accordance with good international practice, to take into account and reflect in loan prices all relevant costs, including tax considerations, where appropriate. .

Source: lainformacion.com

*The article has been translated based on the content of lainformacion.com. If there is any problem regarding the content, copyright, please leave a report below the article. We will try to process as quickly as possible to protect the rights of the author. Thank you very much!

*We just want readers to access information more quickly and easily with other multilingual content, instead of information only available in a certain language.

*We always respect the copyright of the content of the author and always include the original link of the source article.If the author disagrees, just leave the report below the article, the article will be edited or deleted at the request of the author. Thanks very much! Best regards!

For all the latest news click here

Denial of responsibility! termbeamer.com is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – at amritpaljha@gmail.com The content will be deleted within 24 hours.

Leave A Reply

Your email address will not be published.