Negative interest rate is to change the usual deposit interest rate to a negative value. The interest rate sometimes applies when the central bank accepts deposits from private banks. Generally speaking, banks can earn interest when depositing money with the central bank, but in the case of negative interest rates, they need to pay handling fees.

Banks depositing money with the central bank will shrink, so it is expected to prompt banks to actively relax loans to enterprises. For example, on January 29, 2016, the Bank of Japan announced the implementation of negative interest rates of -0.1, which will be implemented from February 16, 2016.

Negative interest rates mean that the inflation rate is higher than the bank deposit rate, and the price index (CPI) rises rapidly, causing the bank deposit interest rate to be actually negative.

Negative interest rate = bank interest rate - inflation rate (CPI index)

Currently, the one-year regular interest rate of my country Global Financial Exchange Bank is 3, while the inflation rate is 3.3, so negative interest rates are also That is the actual rate of return, which is -0.3.

Extended information:

Negative interest rates are essentially a continuation of quantitative easing. As far as Europe and Japan are concerned, the original intention of implementing negative interest rates is to stimulate bank credit and increase inflation expectations; compared with Under this circumstance, Denmark and Sweden initially implemented negative interest rates mainly to alleviate the pressure of capital inflows and currency appreciation.

However, from a fundamental perspective, negative interest rates actually come from the decline in investment returns in the real economy, which also shows a real challenge in the lack of growth points for global economic growth after the financial crisis.

From a micro level, negative interest rates pose a threat to financial institutions that rely on traditional pricing models. This is similar to the "computer Y2K problem". Traditional pricing models do not include negative interest rates as a variable, so these models cannot Correct performance of the pricing function will inevitably affect the normal operation of these financial institutions.

In addition, since the deposit interest rate is still isolated from negative interest rates, the current impact of this policy on individual savers is not significant, but there is also a phenomenon of Japanese people hoarding cash. The impact of negative interest rates on people's psychological expectations is an issue that cannot be ignored.

At the industry level, the banking industry is the first to bear the brunt. Commercial banks are the most important link in the implementation of negative interest rate policies. Negative interest rates narrow the interest spreads of commercial banks. However, banks are often afraid to pass on this tax to consumers due to pressure from peer competition.

Take Europe as an example. The financial reports of large European banks in the fourth quarter of 2015 showed that 6 of the 15 large banks suffered losses and 9 saw profits decline. Since 2016, the stock prices of these banks have declined. All fell, and the decline was much greater than the decline of major European stock indexes during the same period. The reason is that the decline in bank profitability caused by negative interest rates cannot be blamed.

Negative interest rates also have an impact on the global asset allocation industry, especially the bond market. This is reflected in increased volatility in bond yields and a decline in the yield curve. Recently, the government bond yields of many European countries have fallen to record lows, and bonds with negative yields have frequently appeared.

From the perspective of countries that implement negative interest rate policies, the original intentions of their policies are different, and the policy effects and impacts are also different, but these countries are all relatively confident in this policy without exception.

The negative interest rate policy in the Eurozone has been implemented for a long time. It has a certain stimulating effect on bank credit and alleviates debt pressure to a certain extent, but the effect of increasing the inflation rate is not satisfactory; Japan implements three-tier interest rates System, the benchmark interest rate is still positive, and the negative interest rate is more like the Bank of Japan's determination to continue to loosen monetary policy.

At the same time, Japan’s inflation expectations are still weak, the yen exchange rate has risen instead of falling, and it has even become a popular safe-haven currency during the Brexit incident. This is contrary to the original intention of the Bank of Japan’s policy implementation.

The economic conditions of the Eurozone and Japan have their own characteristics. The low inflation rate and slow economic growth are mostly caused by structural problems, such as the aging of the population and insufficient consumer demand. This calls for With the implementation of deeper structural reforms and the implementation of a policy mix to inject vitality into the economy, it seems that relying solely on monetary policy is not enough.

As far as China is concerned, in fact, after the central bank lowered the one-year deposit benchmark interest rate to 1.5 in October 2015, the actual inflation rate that month was 1.6, and China can be said to have entered the era of real negative interest rates.

We are still far away from a nominal negative interest rate policy, but in the context of the current global low interest rates, it is also necessary to accelerate the implementation of relevant supply-side reforms and find new endogenous driving forces for economic growth. , and we also need to pay attention to the extent to which the implementation of negative interest rate policies in some economies will bring external spillover effects to China.

Baidu Encyclopedia—Negative Interest Rates

People’s Daily Online—The Impact of Negative Interest Rate Policies in Various Countries