Here's what Draghi meant when he said the ECB would "cope"

Even the ECB is getting creative now.

At today’s  European Central Bank post-meeting news conference, we discovered that ECB President Draghi and his fellow Governing Council members are pulling on their walking boots for a trip into unexplored territory namely, negative interest rates.

We all dozed through his opening, oft-repeated remark that the ECB, "stands ready to act", (if economic developments so-demand), but then, much more significantly, he repeated the phrase in response to a journalist’s question about whether the ECB would ever consider taking the Deposit Rate negative-that counts as a hint in my book, the markets seemed to agree, and everyone sat up in their seats to listen with rapt attention as he pushed home the hint by saying the ECB would "cope" with any unintended consequences of negative interest rates. That removed the last obstacle-hitherto, the ECB’s response to negative rate speculation has always been to refer to such fears. He also repeatedly emphasised the extent to which the Governing Council feels the transmission mechanism from low ECB policy rates to increased and cheaper lending to real people and businesses had healed itself, even in the Periphery, i.e. therefore, conventional policy tools are once again back in play and potentially efficacious.

I was also impressed by the way he didn’t repeat his usual mantra about not pre-committing to interest rate moves-he usually leaps down anybody’s throat if they’re silly enough to try and get him to do that!

Here’s what he meant when he said the ECB would "cope" with any nasty side effects of negative policy rates. The most frequently sighted potential undesirable consequence is an inability on the part of banks to fund themselves adequately, because Money Market Funds will be unwilling or statutorily unable to lend to banks at negative interest rates, for fear of "breaking the buck" in terms of their redemption prices to investors. So, the story goes, banks will become illiquid. Again.

However, the ECB has already proved to us all that liquidity is its party piece-witness its  Long Term Refinancing Operations and Outright Monetary Transactions, (well, witness the latter’s description at least, since it’s yet to be used in practice). Liquidity is what the ECB feels it’s there for, and what its mandate allows, as opposed to anything that smacks of the provision of deficit funding to governments.

This is what Draghi meant when he said the ECB would "cope". Even as he spoke, the ECB’s boffins were no doubt crafting some new, diabolically clever liquidity scheme.

The psychological effects of actually paying money every day to deposit money at the ECB would have quite a dramatic effect upon banks-more than that to be expected from a cut of only 0.25 per cent, and not only would this small move down in interest rates have an amplified effect upon banks’ willingness to lend, it will also lead the man in the street to think again before putting his money on deposit. Why not go and spend it-surely all these weird experiments  monetary policy must lead to inflation at some stage, so maybe better to buy that car now, before it costs more next year?

And if it works for the ECB, why not for the Bank of England and its incoming and undoubtedly imaginative new Guv’, Mark Carney? His defeated  Deputy, Paul Tucker, has already floated the concept.

Photograph: Getty Images

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

Helena Smith
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Can religion trump the climate change deniers? Meet the inter-faith environmentalists

The role of faith in fighting intolerance, protecting the planet, and trumping Trump.

"I need my brothers here with me - Canon Giles and Rabbi Natan," said Dr Husna Ahmad, motioning for the two men to join her at the pulpit. Taking their hands and raising them above her head, she continued:

“[I need them] to be my voice, to fight for my right to practice my religion, for my right to wear the hijab and to care for my sons and daughters and granddaughters - as they would care for their own”.

Why do I ask for this at an evening about climate change? she asked, her voice now shaking with emotion. “Because only when we think as one humanity can we save this planet.”

The meeting at St John’s church, Waterloo, saw Christian, Muslim and Jewish leaders come together for the first-ever "Faith for the Climate" event. Their message echoed the wider Interfaith movement's statement on climate change: that caring for the earth is our shared responsibility. 

As so often with environmental subjects, the effort felt at risk of being shadowed by the more tangible needs of the soup-kitchen operating in the dusk outside. Yet at a time of rising Islamophobia and anti-Semitism building cross-community connections and tackling prejudice matter more than ever.

Not least since the fledgling consensus on climate change is also under threat. In the US, one of the world's great polluters, the Republican candidate Donald Trump is a climate change denier. 

During last night's televised debate Hillary Clinton took the businessman to task for saying that climate change was "a hoax perpetrated by the Chinese". Trump denied the accusation: "I did not, I did not, I do not say that," he responded. Yet his tweet history suggests otherwise - revealing how a toxic mix of xenophobia and climate scepticism play their part in his wider message.

Prepped with tea and pitta bread, attendees bore witness to a talk by Sir David King - the Foreign secretary's special representative on climate change. By 2035 the world needs to be at net zero emissions, King explained.

Unbearable heat waves, extreme flooding and biblical-levels of crop-destruction wait on the other side of this deadline.

Last week’s UN conference in New York has seen over 30 new nations, including the UK, officially commit to the Paris climate treaty.  Yet against such optimism must be set the looming prospect of a Trump Presidency in America. 

Not only has Trump said he would “cancel” America’s commitment to the Paris agreement. He has also promised to end the “war on coal”, scrap the Environment Protection Agency, and appoint an oil executive to be the Interior secretary. Without America’s support for global action on climate change, the 1.5 degrees target would be impossible to reach.

So how can religion help? On a direct level, many faith-based bodies are already utilising their vast networks to help tackle the challenge.

Since 2004, Operation Noah, a UK-based Christian charity, has called on the church to divest from fossil fuels.

Sir King also described the Pope's 2015 environmental encyclical as an important part of the "crescendo" that set the stage for the successful negotiations on the global climate deal. On the back of such international progress, groups such as Christian Aid, Islamic Relief and the Big Church Switch are strengthening their interventions. Just last week, Christian Aid announced a new $53m fund to improve energy efficiency in developing countries. 

But there is perhaps also another, less direct, way that religion is helping. Christian evangelicals in the US have been more likely to be climate sceptics. Yet in inter-religious contexts, the multiplicity of interpretations can also be an invitation to a deeper interrogation - of the very way we form assumptions about the world. 

Just look at how many takes there have been on the Noah story within Christianity alone. Mike Hulme at Kings College London points to an American Christian evangelical coalition which supports fossil fuels for their ability to provide cheap energy for the poor. Others have claimed that God’s promise to Noah not to drastically alter the earth again means that the impact of climate change will be softened. In contrast, others read floods as a punishment for human sin. According to the Bishop of Carlisle, the 2007 floods were “the consequences of our moral degradation, as well as the environmental damage that we have caused.”

While it may be tempting to pack unpalatable viewpoints off in a "basket of deplorables", or wipe them out with an apocalyptic flood, the takeaway from events like last Wednesday's seems to be a message of expanded community and common ground.

For Canon Giles, simply watching members of different faiths united in prayer had transformative power. "In that moment, we were no longer a gathering of different faiths and dogmas," he said. "We were simply members of the muddled human species, pooling our hopes and prayers."

India Bourke is the New Statesman's editorial assistant.