ECB brainstorms as Draghi seeks stimulus that won't hurt banks

Frankfurt

ONE week before a long-awaited stimulus decision, European Central Bank officials are privately deliberating over how to enhance their monetary policy stance without maiming its transmission.

Committees studying how to mitigate the impact on banks have prepared potential measures that range from variations on a tiered deposit rate to techniques for countering the impact of stimulus on excess liquidity, according to people familiar with the discussions. The suggestions could still be rejected by the Executive Board or turned down at the Governing Council's March 10 meeting. An ECB spokesman declined to comment.

With euro-area inflation once again below zero and concerns mounting over the state of the global economy, ECB president Mario Draghi and his colleagues are considering whether monetary policy needs to give more impetus to the currency bloc's recovery. The chief concern is that negative interest rates, especially if cut further, might squeeze banks' profita…