Financial Stability News

News about financial stability and central banking

The impact of persistent negative interest rates

This post gives a good review of the issues and consequences of pesistent Negative Interest Rate Policy (NIRP)

The NIRP acronym is misleading, however, because unlike ZIRP, NIRP isn’t actually an official “policy” per se, but rather a symptom of a broken financial system increasingly starved for good ‘collateral’.

This phenomena, thought by many to be of short duration, is now having its impact on investors, especially insurance companies and pension funds.

The impact is felt only gradually, but will get worse if NIRP continues. Together with the crisis in the real economy, this dosn’t look good.

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