The European Central Bank (ECB) is thinking about what measures it will take in June. It will definitely lower interest rates, but this will not be its most significant move. It looks like Draghi is preparing a program that grants long-term loans to small- and medium-sized businesses similar to what he did in December 2011 and February 2012.
To keep the program from failing and the loans from going to the banks, which has happened before, the interest rates on cash deposits also needs to be lowered. For the first time, it could be a negative rate, which means that the ECB would pay companies to maintain deposits. It remains to be seen whether end up stillborn or provide the cash that businesses operating in the real economy need.
