Central banks play a pivotal role in setting interest rates
In order to maintain price stability and support jobs
and economic growth. Basically, the interest rates are
The percentage that is charged to borrow money, and with
The exacerbation of the Corona pandemic, some economists suggested a price method
Negative interest as an approach to stimulate growth in economies
troubled.
The theoretical philosophy of negative interest comes from discouraging hoarding by banks
And individuals and stimulating consumer spending and bank lending instead of saving, which helps to
overall growth. While negative interest rates mean that banks charge fees for
Customers to store their money, but this is not the case with all banks. There is no doubt that the payment of
Benefits for borrowers instead of savers It was a bit strange that banks
By imposing fees on household savings and accounts as banks fear customers will withdraw
Their deposits are collected collectively, so despite the decrease in the cash stock, the banks are heading to pay
The cost imposed by central banks in order to maintain the financial consumer.
The International Monetary Fund announced in its report last week that negative interest rates may
Satisfied with the experience of countries that have implemented negative interest rates
such as Denmark, the Eurozone, Japan, Sweden and Switzerland in order to counter inflation
And addressing the decline in the real neutral interest rate, that is, the real interest rate that
The monetary policy becomes neither contractionary nor expansionary.
Policies have helped manage financial conditions by supporting growth and inflation while remaining
The policy of negative interest rates is the subject of real controversy and disagreement in views and visions
policy and a gap in understanding its adoption and application in a wide range of countries. I've got
Doubt and concern about the emerging risks of lawmakers, policy makers, and customers as well
If negative interest is the solution? What are the implications of this illogical and unadopted policy?
Previously, by shifting to liquid cash and weakening the link between central bank interest rates
And other interest rates? Will the banks resist cutting interest rates on lending or even
Resorting to reducing lending to prevent a decline in profits? Do interest rate policies allow?
Negative monetary motivator? A potential side effect of innovative policies is a decrease in
Bank profitability, reduce banking competition, fear of business disruptions
Financial markets and investment funds in the money market.
Fears have been dispelled and central banks that have adopted negative interest rate policies have proven
The stability of its profits, stimulating inflation to a large extent, and that it can reduce prices to the largest degree
possible. As for the central banks that did not implement these policies due to institutional constraints
The law should be guided by negative interest or adopt a similar policy in circumstances
Low level of the neutral real interest rate.
