Is the BoE heading for negative interest rates?

[scooterscot]

You can't reason with emotion.

[WordIsBond]

Sure, it could happen. As you noted, Switzerland did this for non-residents.

As noted, substantive negative interest rates for residents can't happen without banning cash. You can get away with a small negative rate because people will be willing to pay something for safekeeping. So maybe you can go to 0.5 or 1.0%. Any more than that and money gets stashed in the mattress rather than paying the bank.

But you can do it to external holders of your currency. It will only happen if your currency is, as described in the article you cited, a strong safe-haven currency that external buyers want to hold. It's hard to see that really being a likely possibility in the current world, but who knows, if all the Brexiters are right after all, maybe it will happen someday.

The possibility of deep negative rates doesn't really jive with your view of Brexit but we don't necessarily expect you to be consistent on these matters. After all, if I remember correctly, you support the SNP. They whinge about no-deal whilst voting down what we're told is the only deal possible, complain about democracy whilst refusing to accept the results of two votes of the people, want to stay in Europe where the Scots voice is barely heard and leave the UK where the Scots have a disproportionate number of MPs and had a Prime Minister less than 10 years ago, and want to tie the UK in knots over a hard border in Ireland but take actions that would force a hard border on this island. Logic is not really their strong suit, so perhaps it makes sense that it would be one of their backers who is wanting to panic us about negative rates.

[ShandyDrinker]

It already has happened.

Sure, but not the deep negative interest rate policy proposed by the IMF. I'm aware of the likes of Denmark, Sweden and Japan doing it but it's certainly not got below -1% AFAIK.

Governments can't really blame people for not saving for retirement (among other things) if negative interest rates become an all too commonly deployed tool.

[scooterscot]

While I have little doubt that many countries would love negative interest rates, it won't happen until cash is banned .

It already has happened.

[scooterscot]

I can't imagine that. So please tell us from your experience. Trying not to use the worth "Heathrow", "Thistle" or "Bitcoin".

Exactly. And neither can I. Nonetheless many indicators are pointing towards this happening. And I'm wondering, has this happen before? Yes, and it's not pretty.

Switzerland Tried Negative Rates in the 1970s. It Got Very Ugly

Because you can't imagine it, doesn't mean it can't happen. Especially when a private institution answers to no one.

[ShandyDrinker]

While I have little doubt that many countries would love negative interest rates, it won't happen until cash is banned which, as many observers point out, puts the floor on interest rates at zero percent.

If you ban cash, your pesky populace can't then just go and withdraw it all. Sure, you can look at bitcoin or say gold, but they certainly aren't as liquid as cold hard cash.

Some interesting links:

• Banning cash so you pay the bank to hold your money is what the IMF wants - ABC News (Australian Broadcasting Corporation)
• Enabling Deep Negative Rates to Fight Recessions: A Guide

Food for thought and in my opinion absolutely terrifying.

[NotAllThere]

With each month the bank takes more and more away away,

So buy bitcoin and this time next year, you'll be a billionaire.

[scooterscot]

Like a tax, you mean?

No. This is far different. This is in effect a tax on income that has already been taxed. Expect the taxed income is repeatedly taxed every day until the balance is equal to zero.

Amazing to see so much of the world sleepwalking into this situation.

[NotAllThere]

Of course it could never happen. Not the pound. It's not a basket case currency like the Euro,

Or the Swiss France, Danish Kroner,...

[TwoWolves]

Like a tax, you mean?

Or inflation?

You do understand the reason for NIRP and who the primary beneficiaries are don't you?

To quote a recent popular film, this is the endgame. The endgame of a political and ideological order that is falling apart under the weight of it's contradictions and failures.

[BrilloPad]

in effect your labour become worthless.

I can't imagine that. So please tell us from your experience. Trying not to use the worth "Heathrow", "Thistle" or "Bitcoin".

[scooterscot]

nah... that thread was not exactly what I'm meaning. This is about negative interest rates reducing the worth of your labour. Imagine, your salary is paid into your account month on month. With each month the bank takes more and more away away, in effect your labour become worthless.

[TwoWolves]

Done that.

https://www.contractoruk.com/forums/...k-england.html

[scooterscot]

Of course it could never happen. Not the pound. It's not a basket case currency like the Euro, no Sir. This is after all the pound we're talking about.

Me technical charts aside... I'm asking myself, what if? Have any of you asked yourself the what if? I don't think anyone is prepared for this let alone has the know how on how to act when it happens. And when its clear.. everyone will be trying the same action at the same time.

If you've got cash in the bank you're literally going to watch it deplete day by day until it reaches zero with negative interest rates.

What's your plan on something that could not possibly happen?


BoE's Carney says negative rates not an option for UK

Bank of England Governor Mark Carney said he did not think negative interest rates were an option for the British economy at the moment, in comments published on Monday.

“At this stage we do not see negative rates as an option here. I am not criticising others that have used them, but we don’t see it as an option,” Carney told website Central Banking.


Carney also called on France and Germany to take action to ensure that uncleared derivative contracts can function smoothly after Brexit, due to take place on Oct. 31.


Central Banking said it interviewed Carney on Aug. 1, the date he gave a news conference after the BoE published its latest Inflation Report.