Paying the bank to keep your deposit money
Even the big mutual fund giants won’t guarantee the principle in money market funds (the dollar threshold). Now here is an interesting notion for people to think on for a policy occurring in EU policy debates. What would this mean?
From the New York Times:
First there was ZIRP. Now get ready for NIRP.
The first is “zero interest-rate policy,” the strategy for trying to stimulate economic growth that the United States has undertaken for the last 5 ½ years (and the Bank of Japan much longer than that). The second is “negative interest rate policy.” And that’s what the European Central Bank is likely to put in place on Thursday for the 18 nations that use the euro currency.
That, anyway, is the move that leaders of the European bank have telegraphed to markets. That makes this a good moment for the curious mental exercise of pondering what a negative interest rate even means, and why it’s something that monetary policy mavens have been talking about more than they would like over the last half-decade.
Which is no different than putting the money in a safe deposit box except that in that case the cost is a fixed amount no matter how much money (up to the capacity of the box) is in it. Its clear that negative interest rates would raise the demand for currency, since currency will not pay negative interest rates.
Good time to take out that fixed rate loan I’ve always wanted. (If I lived in Europe ,that is. I’d party like it was 1929)