when faced with a liquidity trap alternative procedures for monetary stimulus often become necessary conventional wisdom was that interest rates could not move into negative territory meaning once interest rates reach zero or are close to zero for example 0 01 monetary policy has to be altered to continue to stabilize or stimulate the economy 
the most familiar alternative monetary policy tool is perhaps quantitative easing qe this is where a central bank engages in a large scale asset buying program often involving treasuries and other government bonds not only will this keep short term rates low but it will push down longer term rates which further incentivizes borrowing 2since the great recession of 2008 and 2009 some central banks pushed the limits of zero bound below the numerical level and implemented negative rates 3 as the global economy plummeted central banks slashed rates to spur growth and spending however as the recovery remained slow central banks began entering the uncharted territory of negative rates sweden was the first country to enter this territory when in 2009 the riksbank cut the repo rate to 0 25 which pushed the deposit rate to 0 25 4 since then the european central bank ecb the bank of japan boj and a handful of others followed suit at one time or another there are instances where negative rates have been implemented during normal times switzerland is one such example through much of the 2010s its target interest rate was 0 75 which was raised to 0 50 in 2021 5 japan similarly had adopted a negative interest rate policy nirp with a target rate of 0 1 example of zero bound and negative interest rates in switzerlandthe swiss national bank snb maintains a negative interest rate policy while there are other examples of negative interest rates the swiss example is rather unique in that the country is opting to keep rates very low and negative to prevent its currency from rising too significantly in the swiss example negative interest rates are only applied to swiss franc bank balances over a certain threshold switzerland is viewed as a safe haven with low political and inflation risk other examples of negative and zero bound interest rate policies have often come about because of economic turmoil which requires cutting interest rates to stimulate the economy the swiss situation doesn t fit this scenario the snb has maintained that it must keep rates low to prevent its already relatively high currency value from going even higher a rising currency hurts the swiss export industry therefore the snb has taken a two pronged approach to control the currency the bank has actively engaged in currency market interventions to help cap the strong swiss franc and also keeps interest rates low or negative to dissuade strong speculative buying of the franc in this situation the snb will eventually adopt a zero bound strategy for moving back to 0 and above however that won t happen until the central bank feels it can raise rates without causing too significant of a rise in the currency 