Wednesday, November 20, 2013
NEGATIVE Lending Rates? What happen is going on?
By Reginald Kaigler (DEMCAD)
Are they serious? According to market Watch, central banks are considering a negative deposit rate. Basically, the banks store their money in central banks such as the Federal Reserve and European Central Bank and get pay an interest rate. At least, that's the way it works now. With a negative rate, the banks would have to pay to park money in the central banks.
"The European Central Bank is reportedly considering such a move, and officials at the Federal Reserve keep bringing up the idea.... That means banks would have to pay the ECB to lend to it overnight, an unprecedented move for the bank..."
So the rate for the European Central Bank would go from 0.1% to NEGATIVE 0.1%. What the hell is going on in the financial markets?