Central Banking below Zero: The Implementation of Negative Interest Rate Policies in Europe and Japan
Angrick, Stefan; Nemoto, Naoko | May 2017
Abstract
This paper provides an overview of the operational implementation of negative interest rates in Europe and Japan. Drawing attention to the fact that there is precedent for negative policy rates and negative money market rates, the paper addresses conceptual issues and summarizes measures which define negative interest rate policy. Based on detailed institutional analysis and an examination of the interaction of negative interest rate policies with balance sheet policies, it is argued that there is substantial heterogeneity in the purpose, design and operational specificities of negative interest rate policies across economies, with significant consequences for effective money market rates, private sector funding conditions, and expectations. Summarizing transmission channels of negative rates to the real economy and their potential benefits and risks, the paper calls attention to potential adverse effects resulting from the interaction of negative interest rate policy with tighter liquidity and capital standards adopted since the Global Financial Crisis.
Citation
Angrick, Stefan; Nemoto, Naoko. 2017. Central Banking below Zero: The Implementation of Negative Interest Rate Policies in Europe and Japan. © Asian Development Bank Institute. http://hdl.handle.net/11540/7160.Keywords
Enterprises
Financial aid
Economies in transition
Local Finance
Local Government
Insurance Companies
Banks
Social Equity
Economic Development
Economic Infrastructure
Economic Policies
Regional Economic Development
Microfinance Programs
Public Finance
Local Financing
Financial Stability
Financial Sector Regulation
Social responsibility of business
Accounting
Personal budgets
Cost and standard of living
Bank accounts
Credit control
Regulatory reform
Banks and banking
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