Negative interest rates threaten the financial system
In a negative rate environment, banks must pay to hold loans and securities. They would be punished for providing credit, which is the lifeblood of an economy
Negative interest rates represent a threat to the financial system. To understand why, let’s start with the existing fractional reserve banking system, which is more than a century old.
For every euro or dollar that goes into a bank, some set amount (usually about 10 per cent) must go into a reserve account to be overseen by the central bank. The rest is either lent out or used to buy securities.
In other words,...
Subscribe from just €1 for the first month!
With any subscription you will have access to
Unlimited multi-device access to our iPad, iPhone and Android Apps
Unlimited access to our eReader library
Exclusive daily insight and opinion seven days a week
Create alerts to never miss a subject that matters to you
Get access to exclusive offers for subscribers on gifts and experiences
Get content from Business Post, Business Post Magazines, Connected, Tatler and Food & Wine
Private rental sector remains strong despite Covid-19
Demand continues to outstrip supply in both residential and PRS markets, while developers adapt new build designs to take the pandemic into account
How the programme for government will shape housing
Several strategic changes offer an opportunity for positive reform of planning and development
Comment: US must defuse Covid-19’s ticking time bomb of debt
The United States cannot defeat the pandemic like a military foe but it can learn from looking back at its post-war economic recovery