Cash in Vaults Tested by Munich Re Amid ECB's Negative Rates
- Reinsurer will store at least 10 million euros in experiment
- Costs of cash insurance, logistics may outweigh benefits
This article is for subscribers only.
Munich Re is resorting to the equivalent of stuffing notes under the mattress as the reinsurer seeks to avoid paying banks to hold its cash under the European Central Bank’s negative interest rates.
The German company will store at least 10 million euros ($11 million) in two currencies so it won’t have to pay for the right to access the money at short notice, Chief Executive Officer Nikolaus von Bomhard said at a press conference in Munich on Wednesday. “We will also observe what others are doing to avoid paying negative interest rates,” he said.