why would central banks adopt nirps to stimulate the economy 
monetary policymakers are often afraid of falling into a deflationary spiral in harsh economic times such as deep economic recessions or depressions people and businesses tend to hold on to their cash while they wait for the economy to improve this behavior however can weaken the economy further as a lack of spending causes further job losses lower profits and price drops all of which reinforce people s fears giving them even more incentive to hoard as spending slows even more prices drop again creating another incentive for people to wait as prices fall further and so on when central banks have already lowered interest rates to zero the nirp is a way to incentivize corporate borrowing and investment and discourage hoarding of cash the bottom linenegative interest rates are a monetary policy in which interest is paid from lenders to borrowers rather than from borrowers to lenders this atypical scenario plays out during deep recessions or periods of deflation when monetary efforts and market forces have already pushed interest rates close to or zero such a tool aims to encourage lending spending and investment rather than hoarding some countries like switzerland and japan have until recently implemented negative interest rates 