(Bloomberg) -- Goldman Sachs Group Inc (NYSE:GS). Chief Executive Officer David Solomon suggested Europe’s experiment with negative interest rates is holding the region back and probably won’t look so good in the rear view mirror.
“I think when we look back on negative rates, I think when the book’s written, it’s not going to look like a great experiment,” he said in an interview with Bloomberg TV on Tuesday. “There’s no question that growth in this part of the world has been lagging and negative rates have not allowed an acceleration of that growth in my opinion.”
The comments add to an increasingly heated debate in Europe about the benefits and risks of negative rates, which the European Central Bank has imposed on banks for half a decade now. While central bankers argue the policy supports the economy, the burden on commercial banks is mounting and the industry is warning about detrimental long-term side effects.
Some of Europe’s most senior bankers have blasted negative rates, with Deutsche Bank AG (DE:DBKGn) Chief Executive Officer Christian Sewing saying they ruin the financial system in the long run. Solomon, who took over at the helm of Goldman Sachs a little more than a year ago, also questioned their economic benefit.
Read more: Banks count cost of negative rates as ECB tries to ease pain
Up until a few months ago, many European banks had hoped interest rates would rise soon, buoying their sub-par profitability. But the ECB dashed those hopes in September when it pushed rates further below zero to support the economy as uncertainty from international trade disputes weighs on exporters.
Even if rates will be lower for longer, Solomon signaled that he expects a return to positive rates at some stage.
“I don’t think negative rates are really constructive,” Solomon said in the interview in Berlin. “I worry that when we look back on this experiment of negative rates, we’re not going to like what we see when it’s all over and it’s all unwound.”