[audience looks at each other, looking for the first volunteer]
A decade ago, negative interest rates were a theoretical curiosity that economists would discuss almost as a parlor game. […] Now, it is the stated policy of some of the most powerful global central banks, including the European Central Bank and the Bank of Japan. […]
So how do negative interest rates work?
It depends. In the cases of interest rate targets set by central banks like the E.C.B. and Swedish Riksbank, they set a negative target rate for banks, and banks in turn pass it along to their customers. The E.C.B., for example, currently has a negative 0.3 percent rate, meaning that when banks deposit money at the central bank overnight, they pay for the privilege.
Banks have different ways of passing the negative rates on to depositors, often framed as fees for keeping money in an account, which is basically negative interest rates by another name.
screenshot { David Cronenberg, Scanners, 1981 }
