ECB Policymaker Wunsch Expresses Concerns Over Proposal to Increase Bank Charges

European Central Bank policymaker Pierre Wunsch voiced opposition to a proposal to increase charges on commercial banks, cautioning that such a move could undermine the credibility of future central bank operations and potentially venture into fiscal policy. The debate centers on requiring banks to hold more excess liquidity in unremunerated accounts, partly to mitigate the ECB's financial losses and tighten financing conditions amidst high inflation. Wunsch argued that if banks are heavily taxed on this income, they might be less inclined to participate in future bond purchase schemes.