How much below zero could interest rates go? And could negative rates put an end to paper money?
Negative real interest rates, although they sound counterintuitive, have existed at various times in history. Recently, central banks in Switzerland, Denmark, Sweden, Japan and the euro zone have adopted such policies either to manage exchange rates or to provide stimulus in today’s low-growth environment. Economist Jean-Pierre Danthine examines the impacts of such policies. Although his paper is rather technical and would have benefited from editing for clarity, it provides some good nuggets of information about negative rates’ impacts on society. getAbstract suggests Danthine’s eye-opening report to investors, policy makers and executives.
In this summary, you will learn
- Why some central banks have instituted negative interest rate policies,
- How effective those policies have been and
- What social consequences negative interest rates might have.
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