The dangerous ineffectiveness of negative interest rates: the case of Switzerland

Sergio Rossi
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Sergio Rossi: University of Fribourg, Switzerland

Review of Keynesian Economics, 2019, vol. 7, issue 2, 220-232

Abstract: This paper argues that the negative interest rate adopted by the Swiss National Bank in 2015 has elicited a series of negative consequences across the Swiss economy. It has led an increasing number of agents to invest their savings in the real-estate market, whose prices have overheated, threatening the eruption of a housing crisis. It has also induced a number of financial institutions to turn to riskier businesses in an attempt to continue to earn some returns, thereby increasing financial fragility at systemic level. The paper suggests that a small Tobin tax on all Swiss-franc purchases may contribute to the support of domestic economic activities much better than negative rates of interest.

Keywords: negative interest rates; Swiss monetary policy; Tobin tax (search for similar items in EconPapers)
JEL-codes: E52 E58 E65 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:elg:rokejn:v:7:y:2019:i:2:p220-232

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