Christian Sewing, Deutsche Bank CEO warned the world against the global economic crisis and said the Central Banks “have used their tools to a large extent already” and are now running out of options to control the impact of global economic risks.
Sewing, at the Sibos banking conference in London, said that the European Central Bank and U.S. Federal Reserve have “no conventional measures left to effectively cushion” the blow of a “real economic crisis.”
“I’m particularly worried about a series of financial and geopolitical risks, ranging from the situation in Hong Kong to tension in the Middle East,” Sewing said, adding that the world is facing an “extraordinary macroeconomic situation that is very hard and difficult to predict, and potentially making this whole thing even more volatile.”
Due to the rising concerns over the health of the economy and declining inflation, global central banks including the Fed and the ECB have seen a renewed focus on monetary policy easing.
The ECB lowering its deposit rate by 10 basis points to a record low of -0.5%, as of now lenders are charged for holding idle cash.
“Very few economists believe that cheaper money at this level will have an effect,” Sewing said, adding that this view has been echoed by Deutsche Bank’s own clients. “They will not invest an additional euro just because the loan will be an additional 10 basis points cheaper.”
Sewing’s comments come after the global equities business sees 18,000 jobs slashed, and places a stronger emphasis on transaction banking for corporate clients.
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