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: Motivation #1: Stimulating Inflation
Japan: A Failure to Address the Elephant in the Room
Following an asset bubble collapse that began in 1991, Japan had to contend with The Lost Decade of economic stagnation that some argue continued for a total of 20 years. Japan’s economy has been in first gear since its collapse, with the Nikkei 225 Index still trading at around 50% of its 1989 all-time high. Inflation (or lack thereof) has been the bane of Japan’s economy, and The Bank of Japan has tried all manners of policies such as low rates, money printing, and quantitative easing to stimulate growth. Japan presents a compelling economic case study because it is a highly-developed, self-contained island economy. Unlike, say, countries in Europe, where financial contagion seeps across borders. It was 1999 when interest rates first hit zero in Japan. Since then, the highest inflation recorded was 2.36% in 2014 - attributed as a one-off pre-emption to an increase in sales tax. In 2016 rates finally went negative to -0.1% and have stayed there since.