Got something to say or just want fewer pesky ads? Join us... 😊

Register Log in

Negative bank interest rate?







larus

larus

Well-known member
Jul 7, 2003
6,580
In the land of hope and expectation....
desprateseagull said:
http://www.bbc.co.uk/news/business-27717594

how's that work then- they charge to hold your money, while lending out at gazillions per cent?
Click to expand...

Err, no. The ECB will be charging banks a negative interest rate when they deposit money overnight with it. This it to encourage them to lend more money.

However, this raises even more questions. After the reduction of western central banks interest rates to as good as zero and the negligible effect this had had on growth, might it be possible that there are other major problems. Such as asset bubbles (property), or an elite class who want to cream money off society. We should have accepted the financial crash, allowed asset prices to adjust accordingly and become affordable and reset the system. What the west is doing will not work. We need to be honest about what is affordable and also ensure that the super rich do not get away with paying their share.
 


Igzilla

Igzilla

Well-known member
Sep 27, 2012
1,649
Worthing
larus said:
Err, no. The ECB will be charging banks a negative interest rate when they deposit money overnight with it. This it to encourage them to lend more money.

However, this raises even more questions. After the reduction of western central banks interest rates to as good as zero and the negligible effect this had had on growth, might it be possible that there are other major problems. Such as asset bubbles (property), or an elite class who want to cream money off society. We should have accepted the financial crash, allowed asset prices to adjust accordingly and become affordable and reset the system. What the west is doing will not work. We need to be honest about what is affordable and also ensure that the super rich do not get away with paying their share.
Click to expand...

One could argue (without any tangible evidence) that it's the super rich who determine fiscal policy anyway. I fear the only way to truly reset the system will involve a lot of running about with pointed sticks and blood flowing freely in the streets. Then give it twenty years before we come full circle again :shrug:
 


L

London Irish

Well-known member
Nov 25, 2003
21,962
Trapped inside the Project for the New American Ce
larus said:
Err, no. The ECB will be charging banks a negative interest rate when they deposit money overnight with it. This it to encourage them to lend more money.

However, this raises even more questions. After the reduction of western central banks interest rates to as good as zero and the negligible effect this had had on growth, might it be possible that there are other major problems. Such as asset bubbles (property), or an elite class who want to cream money off society. We should have accepted the financial crash, allowed asset prices to adjust accordingly and become affordable and reset the system. What the west is doing will not work. We need to be honest about what is affordable and also ensure that the super rich do not get away with paying their share.
Click to expand...
Problem is it wouldn't have been the elites and super rich suffering with a depression level slump, but ordinary joes hit by crash levels of mass unemployment. But draghi flopped today and the euro rising has told him so. QE next on the list then, years after everyone else
 


ditchy

ditchy

a man with a sound track record as a source of qua
Jul 8, 2003
5,210
brighton
Nothing to do with super rich or any other individual as such. It is the collective rates that banks get when they deposit their (our) money overnight. The banks can either make it work by lending to other sources ie small businesses other banks etc or they can be lazy and just deposit it with the central bank and get previously as in uk an over night rate equivalent to . 5 percent . The ECB has now stopped that forcing them to lend or pay a charge to deposit . If banks feel that it is too greater risk to lend they will pay the charge to deposit. .The Bof E were warning Barclays as they had exceeded their maximum deposit rate with them which stood at £35 bill . At one stage Barclays had close to £ 55 bill on overnight with the B of E . We haven't got to that stage here yet but it is encouraging banks to work for their money with the stick rather than the carrot beforehand and quite rightly so.
 






GreersElbow

GreersElbow

New member
Jan 5, 2012
4,870
A Northern Outpost
larus said:
Err, no. The ECB will be charging banks a negative interest rate when they deposit money overnight with it. This it to encourage them to lend more money.

However, this raises even more questions. After the reduction of western central banks interest rates to as good as zero and the negligible effect this had had on growth, might it be possible that there are other major problems. Such as asset bubbles (property), or an elite class who want to cream money off society. We should have accepted the financial crash, allowed asset prices to adjust accordingly and become affordable and reset the system. What the west is doing will not work. We need to be honest about what is affordable and also ensure that the super rich do not get away with paying their share.
Click to expand...

Don't be daft! we'll never let capitalism work! /sarcasm
 






K

Kevlar

New member
Dec 20, 2013
518
the idea is to the bring the rate of loans and savings down
to discourage savings and encourage spending to fight deflation
but banks have little leeway to pass on lower loan rates
as this represents their profits and incentive to lend
also their is a requirement to hold a small % of their deposits
with the central bank .Households and firms do not borrow money
to stuff in a mattress .When they buy stuff they deposit money
in the accounts of those they buy from in this way loans
build bank deposits and add to the required minimum reserve they need to
deposit at the central banks.
The only way negative rates can stimulate the economy is to
persuade households and firms to spend and invest as the rates of interest
on savings decline.
 


Super Steve Earle

Super Steve Earle

Well-known member
Feb 23, 2009
8,386
North of Brighton
ditchy said:
Nothing to do with super rich or any other individual as such. It is the collective rates that banks get when they deposit their (our) money overnight. The banks can either make it work by lending to other sources ie small businesses other banks etc or they can be lazy and just deposit it with the central bank and get previously as in uk an over night rate equivalent to . 5 percent . The ECB has now stopped that forcing them to lend or pay a charge to deposit . If banks feel that it is too greater risk to lend they will pay the charge to deposit. .The Bof E were warning Barclays as they had exceeded their maximum deposit rate with them which stood at £35 bill . At one stage Barclays had close to £ 55 bill on overnight with the B of E . We haven't got to that stage here yet but it is encouraging banks to work for their money with the stick rather than the carrot beforehand and quite rightly so.
Click to expand...
You can beat up a bank for not lending, but you can't force a customer to borrow. Even really low rates don't help if there isn't the confidence in ability to make the repayments.
 


You must log in or register to reply here.

Share this page

Albion and Premier League latest from Sky Sports


Top
Link Here