ECB's Decision to Scrap Interest on Reserves Deals $6 Billion Blow to Banks

The European Central Bank will stop paying banks for the money they are required to keep at the institution as a minimum reserve, a surprise move that could cut billions from lenders’ interest income.

Europe’s banks most recently were required to stash about 165 billion euros at the ECB as minimum reserves, according to data through June 20 on the central bank’s website. The central bank paid 3.25% on that amount, translating into annual income of about 5.4 billion euros ($6 billion).

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