Interest rate#Negative interest rates

Negative interest rates are interest with which a credit is debited. Economically, it is minus interest that can be charged on credit and have to be paid by the creditor or be removed before the repayment of the credit.

Real and nominal interest

We distinguish between negative real interest rates and nominal interest rates negative. Negative real interest rates occur when the market interest rate is below the rate of inflation. Although the creditor receives a (positive ) interest, but the purchasing power of capital declines. A negative real interest rates in the market, investors try a shift in investments in inflation- linked assets. When such assets are equities, real estate, commodities or precious metals like gold. Also bonds fall as inflation- protected bonds under this category. The attempt by the central banks to keep the nominal interest rate as low as possible and to keep real interest rates below zero, is referred to as " financial repression ".

A negative nominal interest rate is a nominal interest rate that is below zero. It may come as a negative coupon or as a negative return. A negative Coupon corresponds to the creditors to be paid by the nominal interest rate while a negative rate of return that arises because the creditor buys his claim to the repayment amount at a price above the repayment amount and this difference is also not cured by coupons.

Negative interest rate and currency holdings

The alternative to cash investments is the cash holdings. Since the cash holdings equivalent to an interest rate of zero, enter negative nominal interest rates, ie less than zero, the market usually rare, for example, in certain situations, like the financial crisis in 2007 and the euro crisis, and to a lesser extent on.

Economics

In economics, the planned savings with the planned investment by a certain equilibrium interest rate be brought to compensate when about a classical saving function is assumed, according to which savings are higher, the higher the it offered interest rate, and are scheduled according to an investment function, the less investment the higher the interest rate. In theory this could be less than zero this equilibrium interest rate, which is a particular challenge for monetary and fiscal policy. For Carl Christian von Weizsäcker, the idea of ​​a " Savings Glut- thesis " is related to the capital- theory-based thesis of the possibility of negative equilibrium real interest rate. In this situation would the equilibrium real interest rate, which leads to the same high level of investment and savings, less than zero.

Examples

The following discussion refers to a negative nominal interest rate or a negative return of securities.

The term is used in Switzerland for the Commission, which can be calculated on the deposits of foreigners. Because thus the currency speculation should be fought, he was perceived as penalty rate.

In Switzerland, there was a regulation that could cause a ban on the return of deposits in Swiss francs by foreign donors or, in addition, the collection of a commission, the so-called negative interest, in the amount of up to 10% per quarter was possible. In order for the country to ward off the excessive inflow of capital from abroad, who influenced the exchange rate of the Swiss franc to the detriment of Swiss exporters. It has been applied and discussed 1964-1966 by the end of June 1971, with brief interruptions until November 1979. The instrument is also used today in the wake of the strong Swiss franc, again.

Denmark was in December 2011, three -month government bonds with a nominal interest rate of 0.21 percent, which were completely accepted by investors. The Danish central bank attributes this to the fact that investors prefer a bulk of their money get back rather than run a risk of loss to a positive interest rate. For investors from the euro area, the bond can also lead to gains and thus to a positive total return if the euro depreciates against the Danish crown over the investment period.

The German state is considered as part of the Euro crisis as a safe haven for investors, which led to a negative interest rate on government bonds. In January 2012, government bonds were sold, which yielded a rate of -0.0122 %. On 18 July 2012, the federal government was able to sell two -year bonds at an interest rate of -0.06 %. Previously, negative interest rates were already occurred for bonds, which had also been issued by Germany or the Netherlands, France and the EFSF bailout fund. In August, the debt management of the federal earned 3.8 billion euros from the sale of Federal Treasury notes, that is, their return was -0.0499 percent. In October 2012, the EFSF was able to once again to a negative interest rate, -0.0433 % and -0.024 %, debt, in November the federal government to -0.0116 percent. On 3 December 2012, two -year government bonds were traded with a negative return of -0.019 %. In 2012, the federal government had no interest in 21 out of 70 securities auctions pay to his creditors, but conceded the contrary a premium. Even at the beginning of 2013 on January 7, the federal government could collect a premium of 3.5 billion euros at the auction of six-month securities at the auction of treasury bills with six -month maturity surrendered on April 8, 2013 a negative return of 0, 0002 percent. The ESM could also collect a premium for its borrowing.

Free Economic

In addition, the term negative interest rate is used in the context of a theory of free economy, according to which the velocity of money is related to the level of the interest rate. Even with single exchange circles referred to as a retention fee of adverse interest rate will be charged to secure the circulation of credit.