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Is the BoE heading for negative interest rates?

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    #11
    Originally posted by ShandyDrinker View Post
    While I have little doubt that many countries would love negative interest rates, it won't happen until cash is banned .

    It already has happened.
    "Never argue with stupid people, they will drag you down to their level and beat you with experience". Mark Twain

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      #12
      Originally posted by scooterscot View Post
      It already has happened.
      Sure, but not the deep negative interest rate policy proposed by the IMF. I'm aware of the likes of Denmark, Sweden and Japan doing it but it's certainly not got below -1% AFAIK.

      Governments can't really blame people for not saving for retirement (among other things) if negative interest rates become an all too commonly deployed tool.

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        #13
        Sure, it could happen. As you noted, Switzerland did this for non-residents.

        As noted, substantive negative interest rates for residents can't happen without banning cash. You can get away with a small negative rate because people will be willing to pay something for safekeeping. So maybe you can go to 0.5 or 1.0%. Any more than that and money gets stashed in the mattress rather than paying the bank.

        But you can do it to external holders of your currency. It will only happen if your currency is, as described in the article you cited, a strong safe-haven currency that external buyers want to hold. It's hard to see that really being a likely possibility in the current world, but who knows, if all the Brexiters are right after all, maybe it will happen someday.

        The possibility of deep negative rates doesn't really jive with your view of Brexit but we don't necessarily expect you to be consistent on these matters. After all, if I remember correctly, you support the SNP. They whinge about no-deal whilst voting down what we're told is the only deal possible, complain about democracy whilst refusing to accept the results of two votes of the people, want to stay in Europe where the Scots voice is barely heard and leave the UK where the Scots have a disproportionate number of MPs and had a Prime Minister less than 10 years ago, and want to tie the UK in knots over a hard border in Ireland but take actions that would force a hard border on this island. Logic is not really their strong suit, so perhaps it makes sense that it would be one of their backers who is wanting to panic us about negative rates.

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          #14
          You can't reason with emotion.
          "Never argue with stupid people, they will drag you down to their level and beat you with experience". Mark Twain

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