(Reuters) – Germany does not currently have to make alternative investments after the European Central Bank decided to temporarily pay interest on government deposits, a finance agency spokesperson told Reuters.
The ECB said on Thursday it would pay interest on governments’ cash deposits until April 2023, temporarily removing a 0% cap after it hiked rates.
The move follows concerns that governments could run down the cash and escalate a shortage of bonds used as collateral in the bloc, as a 0% cap would have meant deploying the cash in markets would have been more profitable.
“As it remains possible for us to deposit liquidity with the central bank at market conditions, as of today we don’t have to make use of alternative investment options,” the spokesperson said.
(Reporting by Yoruk Bahceli; editing by Jason Neely)