How Low Can It Go? Central Banks Adopting Negative Interest Rates

By Clifford Hwang

On January 29, 2016, the Bank of Japan set negative interest rates, cutting the interest rate to -0.1%.  The European Central Bank along with central banks in Denmark, Sweden, and Switzerland have previously cut interest rates to below zero.  Negative interest rates in effect make it costly to save money and encourage spending, and may be considered a useful short-term tool for central banks.  It will be interesting to see how low interest rates can go, and what effects they will have on banking industry.  In a world of negative interest rates, one must also wonder what effects these interest rates will have on lending and how those deals will be structured. Read more about negative interest rates at BBC.