FRANKFURT (Reuters) – European Central Bank policymakers are debating ways to wean the euro zone off years of easy money, floating ideas such as a new kind of multi-year loans and staggered increases in interest rates, sources told Reuters.
The ECB will have a difficult task over the next couple of years: dialing back its unprecedented stimulus without hurting a banking sector still deeply divided along national lines.
Conversations with five sources on or close to the ECB’s policymaking body showed rate-setters were beginning to come up with ideas to ease the transition, including raising only the interest rate on bank deposits at first and offering multi-year loans at floating rates on a permanent basis.
These ideas are designed to avert a liquidity squeeze feared by bankers and investors in southern Europe.
A spokesman for the ECB declined to comment
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