Monetary policy has distributional effects. Extreme monetary policy has extreme distributional effects. That’s the lesson learned during the last ten years in the eurozone when the ECB constantly eased its policy, up to the point of the introduction of negative interest rates and asset purchase programs, worth several trillions of euro. The fluctuations of net interest incomes of economic sectors in different euro countries bear impressive witness to that.
With the “Allianz Net Interest Income Calculator”, these changes can vividly be illustrated; a comparison between countries and sectors is possible as well. Particularly revealing are the cumulated sums of annual changes against the base year 2008: in many cases, these sums amount to hundreds of billions of euro. Moreover, the calculator also allows analyzing the drivers behind the development of the net interest income, namely the volumes of assets and liabilities, received and paid interest and (implicit) interest rates. That’s because although the extreme low interest rates were surely the most influential factor for the net interest income, the reaction of market participants played a role, too; they could amplify as well as mitigate the impact of extremely low interest rates.