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The Interest Rate Unbound?

Jean-Pierre Danthine

Comparative Economic Studies, 2017, vol. 59, issue 2, 129-148

Abstract: Abstract What have we learned from the recent international experiences with negative interest rates? This paper reviews the evidence. Negative interest rates have proved so unpopular that it is unlikely that a full liberation from the Zero Lower Bound is within sight. The Swiss experience, however, suggests it might be possible to adopt significantly lower interest rates by capitalizing on the unwillingness of banks to transmit negative rates to retail depositors while making it financially feasible for them to do so. The resulting asymmetric transmission mechanism may suit small open economies in need of a negative interest differential.

Keywords: negative interest rates; paper currency; transmission mechanism; tiering system (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2017
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