Christine Lagarde said back in August that the European Central Bank still had room to cut rates if needed. However, she added that this could pose a challenge to financial stability in Europe. More and more banks are passing on the negative interest rates to depositors and this is undermining the elderly and pensions. From a broader view, this policy of negative interest rates has undermined the euro even as a reserve currency. Nobody wants it in their books. It is like it has the plague. I cannot express how serious this policy of negative interest rates has been. It has been the cure to eliminate the euro as a reserve currency. If the US wants to kill the dollar, just adopt negative interest rates and watch how it plummets.
I believe you may see Lagarde try to unravel this mess created by Draghi.
