Why is Kilmallock Credit Union imposing a savings cap ?

Members savings which are not borrowed by other members are invested in the financial markets to earn a return. Financial institutions currently have excess deposits so that some of them are charging credit unions to hold their funds. This is referred to as negative interest. The central bank also require that we maintain regulatory reserves of 10% of total assets. This means that for every €100,000 of savings, we must allocate €10,000 from our surplus into a regulatory reserve. In times of uncertainty (such as we are now experiencing with Covid-19) members tend to save more and borrow less. This has resulted in an increasing gap between our loans and savings. Because of the low interest environment and the increased level of savings, we made the difficult decision to impose a savings cap.