How do negative interest rates work in reality? Can anyone explain? I can't get my head round it.
In theory the bank would pay you to have a mortgage, wouldn't they? But surely that doesn't happen. Similarly your savings account balance would reduce every year - but again surely everyone will just withdraw all of their savings until rates are positive again. So in my simple mind they are actually not a sustainable "real thing".
What experience has the world already had of negative rates? Didn't they have them in Japan for several years? Is there a limit of how low they can go?
In theory the bank would pay you to have a mortgage, wouldn't they? But surely that doesn't happen. Similarly your savings account balance would reduce every year - but again surely everyone will just withdraw all of their savings until rates are positive again. So in my simple mind they are actually not a sustainable "real thing".
What experience has the world already had of negative rates? Didn't they have them in Japan for several years? Is there a limit of how low they can go?
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