Introduction of Fixed-Rate Government Bonds and Customer-Centric Approaches in Response to Rising Interest Rates

Fixed rate government bonds

The fact that interest rates have risen so sharply is primarily due to the fact that the ECB has been gradually increasing the key interest rate again for the past year and a half due to inflation.

“It is clear that there is a need for action,” says Brunner. He and Chancellor Karl Nehammer (ÖVP) had many discussions with the banks. “We agree that we have to react.” Savers should now benefit more quickly from rising interest rates. “An important aspect here is transparency. I am therefore pleased that the industry has agreed to report the conditions to a platform operated by the Austrian National Bank,” says the minister.

In addition, the Ministry of Finance (BMF) wants to revive the “Federal Treasury”. This means that private individuals can purchase fixed-interest government bonds from the Republic of Austria. A “very safe method”, according to Brunner. An interest rate cap, as demanded by the SPÖ, is hardly possible under antitrust law and would result in distortions on the capital markets.

➤ Read more: Regulate banks more tightly? Experts tend to disagree

“Will be customer centric”

Cernko also explains: “We do not see today that a large number of Austrian households are in danger of collapsing under the interest burden.” In any case, the banks would have an interest in joint solutions with borrowers. “For those private households that experience difficulties, we will therefore waive dunning fees and default interest for the first twelve months,” said Cernko. Deferrals and term extensions will be examined on a case-by-case basis. “We’re going to be really customer-oriented here,” says Cernko.

But he also emphasizes that you only react to a fear. It’s about individual cases. “What I can promise: We will not use this situation to earn additional money,” says Cernko.

In addition, the banks are in talks to use their own funds to raise a one-off pot from which interest subsidies for the purchase of housing could be financed – for young families.