Negative interest rates

EdGasketTheSecond

metrobus said:

If a bank decided to start charging interest on deposited money rather than paying, there would be a mass withdrawal frenzy, and it would take only a relatively small percentage of its held deposits to be suddenly withdrawn to cripple them.

Not really, they'd just borrow on the money markets; banks aren't that keen to attract retail deposit investors which should be pretty obvious.

happybagger

Building Societies, however, do not have so much flexibilty, and have to be funded in part (not certain how much now) by retail 'shares'

John_

happybagger said:

Building Societies, however, do not have so much flexibilty, and have to be funded in part (not certain how much now) by retail 'shares'

Retail deposits in instant access accounts aren’t very useful to banks for their liquidity metrics, they have to in effect assume that they will all be emptied tomorrow, so need to fund elsewhere already.

Thrugelmir

metrobus said:

If a bank decided to start charging interest on deposited money rather than paying, there would be a mass withdrawal frenzy, and it would take only a relatively small percentage of its held deposits to be suddenly withdrawn to cripple them.

Some corporate Euro accounts have had negative interest rates applied for some time. 

bowlhead99

Thrugelmir said:

metrobus said:

If a bank decided to start charging interest on deposited money rather than paying, there would be a mass withdrawal frenzy, and it would take only a relatively small percentage of its held deposits to be suddenly withdrawn to cripple them.

Some corporate Euro accounts have had negative interest rates applied for some time. 

Yes, its not unprecedented at all because we have seen negative rates in places like the Eurozone, Switzerland, Japan etc.

I have clients running investment funds whose balances at RBS were paying them negative interest rates on substantial millions of Euros throughout 2019. They aren't sticking the cash under the mattress.

In Zug, as with some other cantons, the tax regime is quite favourable for HNW individuals and some are paying negative interest rates on their mortgaged property.

The fact that the typical UK retail banking customer is unaware of what is going on elsewhere in the world doesn't mean they won't eventually see the same in their daily lives or wouldn't be able to get their head around it.

happybagger

bowlhead99 said:

The fact that the typical UK retail banking customer is unaware of what is going on elsewhere in the world doesn't mean they won't eventually see the same in their daily lives or wouldn't be able to get their head around it.

Maybe. UK customer seems more obsessed with comments and pictures on social media than most, and devoid of common sense when faced with what they see might be a "disaster", consider toilet rolls in March for example