Title: Analyzing the Effects of Negative Interest Rates | Toptal
Headings: Analyzing the Effects of Negative Interest Rates Across Five Economies
Analyzing the Effects of Negative Interest Rates Across Five Economies
What Nations Have Experienced Negative Base Rates?
History of Central Bank Base Rates for Negative Interest Rate Nations: 2012 - 2019
The Importance of the Base Rate
Motivation #1: Stimulating Inflation
Japan: A Failure to Address the Elephant in the Room
Eurozone: Compromises of Disparity
Sweden: Importing Inflation
Motivation #2: Defending Currencies
Switzerland: Safe Haven Surges
Denmark: A Game of Krones
How Have the Effects of Negative Interest Rates Been Limited?
1. They Create New Bubbles
2. Consumer Psychology is Idiosyncratic
3. Paper Money is Slippery
Percentage Usage of Paper Money in Major Economies (2017)
4. Regulation Can Contradict Monetary Policy
5. Seepage is Inevitable
Are Governments Addicted to Negative Interest Rates?
Share of Global Bond Market by Yield Bucket: 1996 - 2019
Understanding the basics
How do negative interest rates work?
Why are Japanese interest rates so low?
Does Sweden have negative interest rates?
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Content: Japan is an economic case that many scholars devote years to studying. For the sake of brevity: negative rates have not worked in Japan because they have failed to address the elephant in the room of its broader structural issues. On a macro-societal level, Japan faces the following problems: A stalling export engine threatened by the emergence of other Asian technological hubs
Aging demographics
Low birth rate and inward migration to replace retiring workers
Negative rates have not stimulated the economy, as an aging population is not going to stop saving. The banks of Japan have not put money to work locally; instead, they have embarked on large (and failed) expansion plans overseas and lending their reserves into foreign assets, such as the CLO markets. Public social spending in Japan has doubled from 1991 levels to reach 22% of GDP. The government is bloated with debt and restricted in its ability to invest in widespread structural changes to its economy due to its increasing obligations to an aging populous. Eurozone: