> So why can’t banks provide higher yields with simple savings accounts?
Because yield is the price that borrowers pay for borrowing funds. When there are a lot of funds available for borrowing and not many people wanting to borrow yields will fall. There is just nothing central banks or commercial banks can do to raise yields if there is little demand for loans.
> There is just nothing central banks or commercial banks can do to raise yields if there is little demand for loans.
I am sorry but I think you've got this completely the wrong way. The demand for loans did not shrink in the last couple of years: Look at the housing prices (including the infamously high rents) and the volume of credits people burden themselves with. Rather, the amount of liquidity (i.e. money) circulating around has increased significantly. This pushed interest rates down to a minimum. And why is that so? It's because central banks are flooding the economy with money for years. So it is well within their power to change that. But it won't be nice for many parts of our inflated economies ...
This is not how banks operate. When a bank makes a loan, the bank creates a new deposit in its balance sheet, in effect creating new money out of thin air. [1] Most of the money in circulation is created by banks in this way. This means banks don't need liquidity to make loans, because they can create their own liquidity. And, yes, the demands for loans in the EZ crashed during the financial crisis and hasn't recovered ever since, which explains the low interest rates.
Because yield is the price that borrowers pay for borrowing funds. When there are a lot of funds available for borrowing and not many people wanting to borrow yields will fall. There is just nothing central banks or commercial banks can do to raise yields if there is little demand for loans.