Vooruit links savings interest to interest that banks receive themselves

Vooruit is submitting a bill to fix the savings interest to the deposit rate of the European Central Bank. ‘If the banks raise the interest rate for home loans sharply, the interest on savings must also rise,’ says parliamentary group leader Melissa Depraetere.

Because Prime Minister Alexander De Croo (Open VLD) keeps the file away from the government table, Vooruit itself is submitting a bill to raise the interest on savings books. ‘It is not acceptable for interest rates for a loan to be much higher than the interest rates that savers receive,’ says Vooruit party leader Melissa Depraetere.

The socialists criticize the fact that the banks continue to oppose an increase in interest rates on savings. That is why they have drafted a bill to raise savings interest to protect purchasing power. They are not doing this by raising the legal minimum interest rate as the Greens propose or as State Secretary for Consumer Protection Alexia Bertrand (Open VLD) suggested.

Vooruit’s bill links the interest rates together, so that the interest on savings automatically rises in line with the deposit rate of the European Central Bank (ECB), the interest rate at which banks can store their money at the ECB. The ECB raised interest rates to 3.25 percent, with the intention of making borrowing more expensive. This weakens economic activity and lowers inflation. The interest on savings accounts should also rise. ‘But in times of crisis, banks do just the opposite. They make exorbitant profits on the high interest rates for home loans and refuse to raise savings rates,’ says Depraetere.

The banks are making exorbitant profits on the high interest rates for home loans, but refuse to raise savings rates.

Melissa overtakes

Chamber party leader Vooruit

Vooruit wants to fix the interest on savings books to the deposit rate of the ECB, with a profit margin of 2 percentage points in favor of the banks. With a deposit interest rate of 3.25 percent, as it is now, Vooruit’s proposal amounts to a minimum base interest rate of 1.25 percent and a minimum fidelity premium of 0.30 percent on savings accounts.

Vooruit wants the bill to enter into force on July 1, although it is doubtful whether the socialists will receive sufficient support from the majority. The liberals and the Christian Democrats are suspicious of government intervention in savings interest. That is why De Croo did not put the discussion about savings interest on the agenda of the core cabinet.

Finance Minister Vincent Van Peteghem (CD&V) stimulated the discussion by drawing the attention of the banks to their resentment about the low interest rates on savings. But he did no more than that. Each bank must decide what to do separately, it says. The banks are not allowed to consult with each other about interest rate policy, because that would be contrary to competition rules.

Bertrand already suggested that an increase in the minimum interest rate of 0.11 percent could serve as a big stick to encourage the banks to raise savings rates. Although she mainly hopes that competition will play a role among the banks. That is also what PS Deputy Prime Minister Pierre-Yves Dermagne intends with his bill that allows consumers to switch banks without losing their affordable home loan.

Forward continues. The bill is in line with that of the Greens, who want to set a maximum gap between the interest rates of the ECB and those on savings accounts. “For example, a gap of 2 percentage points,” says Deputy Prime Minister Petra De Sutter (Groen). “If the ECB’s interest rate is 3.25 percent today, the minimum interest rate of the banks should be 1.25 percent.” This brings De Sutter to the same savings rate as Vooruit.

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