On Bloomberg on Wed 20th Nov, was an article about the ECB considering negative interest rates. According to the article, the European Central Bank “will offer” -0.1% on deposits
What this means, is that clearing banks in the €uro Zone who deposit cash with the European Central Bank will be effectively charged for holding their money with the central bank, thus negative interest rates.
e.g. €1,000,000 on deposit (€1m) over 12 months will become €999,000.
Yes a loss of €1,000 Euros.
One potential positive side effect of negative interest rates, is that the clearing banks may actually decide not to deposit excess cash with the European Central Bank, and instead use the cash to create loans for business, industry and individuals to kick start employment and economic growth.
Perhaps the economic state of the €uro zone is worse than what is actually reported, and the European Central Bank is taking drastic and radical action to fight economic stagnation and the record unemployment that is affecting so many people, and threatens to create lost generation.