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Negative Interest rates

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Comments

  • grizzly1911
    grizzly1911 Posts: 9,965 Forumite
    purch wrote: »
    No. That is not how the Banking system works.

    All money is effectively held in reserve accounts with the BOE, and all payments between UK clearing Banks are made as transfers between their reserve accounts.

    All credit balances left receive the current Bank rate.

    You can read all about it in the Banks red book if you have a spare few hours

    What would happen if we all took our money out and put it under the bed?

    Not sure if I misheard on 5L that Italians have a 1000EU witdaily withdrawal limt in place?

    If the governemnt are effectivelt taking our money off (negative interest rates) us and dictating how we could withdraw it aren't we turning into a "communist" state?
    "If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....

    "big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
  • N1AK
    N1AK Posts: 2,903 Forumite
    Part of the Furniture 1,000 Posts
    grizzly1911 wrote: »
    If the governemnt are effectivelt taking our money off (negative interest rates) us and dictating how we could withdraw it aren't we turning into a "communist" state?

    It's not quite as simple as that. The BOE doesn't directly deal with us (normal savers) and the rate isn't linked directly to savings. What this would do is make it less attractive for banks to keep money rather than lend it out, this may or may not lead to decreased interest rates. It would certainly not mean that their would be a negative rate on typical savings accounts.

    I would have no issue with the BOE dropping the rate to 0% now (even though it should in theory slightly increase inflation). It would make it more attractive for the banks to lend which would encourage greater economic activity.
    Having a signature removed for mentioning the removal of a previous signature. Blackwhite bellyfeel double plus good...
  • Dribley
    Dribley Posts: 178 Forumite
    Meanwhile, over on HPC they're getting the razor blades out :rotfl:
  • Mr._Pricklepants
    Mr._Pricklepants Posts: 1,311 Forumite
    Dribley wrote: »
    Meanwhile, over on HPC they're getting the razor blades out :rotfl:

    How original. :o
  • HAMISH_MCTAVISH
    HAMISH_MCTAVISH Posts: 28,592 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    I posted on here that it would be a good idea back in 2009.

    Nice of the BOE to be so forward thinking.... ;)
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”
    -- President John F. Kennedy”
  • james_toney
    james_toney Posts: 178 Forumite
    Dribley wrote: »
    Meanwhile, over on HPC they're getting the razor blades out :rotfl:


    i am sure they will be :rotfl:

    Crash off for another year then? :)
    Ex HPC fool
  • Mallotum_X
    Mallotum_X Posts: 2,591 Forumite
    Part of the Furniture Combo Breaker
    HAMISH_MCTAVISH wrote: »
    I posted on here that it would be a good idea back in 2009.

    Nice of the BOE to be so forward thinking.... ;)

    That recovery is locked in now then eh?
  • grizzly1911
    grizzly1911 Posts: 9,965 Forumite
    edited 26 February 2013 at 5:35PM
    N1AK wrote: »
    It's not quite as simple as that. The BOE doesn't directly deal with us (normal savers) and the rate isn't linked directly to savings. What this would do is make it less attractive for banks to keep money rather than lend it out, this may or may not lead to decreased interest rates. It would certainly not mean that their would be a negative rate on typical savings accounts.

    I would have no issue with the BOE dropping the rate to 0% now (even though it should in theory slightly increase inflation). It would make it more attractive for the banks to lend which would encourage greater economic activity.

    Appreciate the BOE don't inteeract directly with us. Basic accounts are on virtual zero rates anway.

    Personally I doubt it will do much to stimulate the desire to borrow and lend. Just an enfeebled gesture.

    The governement already holds a majority stake in RBS, if theywant lending turned on they have the mechanism to do it directly. They (us) can directly pick up the pieces later too but at least we would have some control over the pot rather than some cancerous derivative book to be sorted out.

    Perhaps we should just accept the bumpy landing and allow things to pan out naturally. At some point consumers will start buying again because they have too. Business will start reinvesting once it thinks conditions are right.

    I do wonder whether the threat, with adequate noitice, of increased rates for newly agreed facilities might provide more motivation. Get in quick etc.
    "If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....

    "big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
  • coastline
    coastline Posts: 1,662 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    grizzly1911 wrote: »
    What would happen if we all took our money out and put it under the bed?

    You'll need to spread your risk and put it under several mattresses...theres women about you know..:D
  • grizzly1911
    grizzly1911 Posts: 9,965 Forumite
    coastline wrote: »
    You'll need to spread your risk and put it under several mattresses...theres women about you know..:D

    Under the bonnet on the car would be the safest place;)
    "If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....

    "big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
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