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Wednesday, March 09, 2016

Economists at global bank body warn of risks from negative interest rates

Economists at a key central bank organization are warning of potential risks from the negative interest rates in place in Europe and Japan.

Central banks in the eurozone, Denmark, Japan, Sweden and Switzerland have all taken rates below zero and into uncharted territory.

But nobody's quite sure what the long-term results will be from the new and unconventional policies, which involve the central banks charging commercial lenders to deposit funds with them. The aim is typically to encourage people and businesses to spend money rather than save it.

"There is great uncertainty about the behavior of individuals and institutions if rates were to decline further into negative territory or remain negative for a prolonged period," economists from the Bank for International Settlements (BIS), a group of 60 global central banks, wrote in a report published Sunday.


1 comment:

Anonymous said...

It's simple. When you have no savings or other resources to survive on then you will be forced to take whatever handouts you are given.