German Banks Resist ECB Plan to Hike Cash Reserve Requirements

Heiner Herkenhoff, chief executive of the Association of German Banks, argues that forcing institutions to park more liquidity in unremunerated accounts will stifle profitability just as geopolitical instability demands stronger balance sheets. He warned that the move would force German banks to fall further behind global rivals by curbing their capacity for lending and essential investment.

While the ECB Governing Council has yet to formally debate the measure, the proposal is gaining traction as a tool to manage the side effects of prolonged inflation fighting. Sources indicate that discussions remain in the early stages, with a final decision not expected until the autumn. For now, the German banking sector remains firm: they view the potential shift not as a regulatory adjustment, but as an avoidable competitive disadvantage.