Why the ECB May Listen to European Banks on Tiering

The video discusses the concept of tiering in the context of European banks dealing with negative interest rates due to quantitative easing. Banks in Europe have excess reserves parked at the ECB, incurring costs due to negative rates. The ECB is considering further rate cuts, which could harm growth by reducing bank lending. To mitigate this, the ECB may implement tiering, exempting some deposits from negative rates. This approach is complex, especially in the eurozone, where banks with larger deposits, mainly in northern Europe, would benefit more, highlighting regional disparities.

In what ways might larger banks benefit more from negative rates compared to smaller banks?

What potential effects could the European Central Bank's policies have on the eurozone economy?