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  • Money Magazine

    We get to negative interest rates

    Oct 30, 2019 3 minutes

    WHAT IS A NEGATIVE INTEREST RATE?

    In practice, it means the bank charges you to deposit your money and pays you to borrow. And if that sounds like a fast way for the banks to go broke, you’re right. In most cases, negative rates have been applied by central banks on the cash deposited with them by banks. The theory is that by penalising banks for holding excess cash, the central bank will force them to go out and lend more money, which should stimulate the economy.

    Negative rates generally haven’t flowed through

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