Us President Donald trump called the Federal reserve system (FRS) the USA (American Central Bank) to introduce negative interest rate on loans. This practice is against the background of a pandemic crisis is already applied in many developed countries and in the EU, and Asia. When using not borrower pays the interest about the loan, but on the contrary, the Bank pays him the money for the borrowed funds: just take it! However, it is not so simple. Experts believe that Washington tending to a negative rate, hopes to finally put the whole world into dependence on the dollar.
“I am firmly convinced that we need a negative rate,” said trump, commenting on the statement by fed Chairman Jerome Powell that the financial regulator does not consider this question (currently, the key fed rate is set at 0-0. 25%). The example of the American President cited “Germany, China and all others” who have long enjoyed such a mechanism and receives this income. “Crazy, but other countries do it. We also have opportunities for this. I’ve been waiting for this all my life,” said trump.
In economic theory, it is believed that the negative rate should encourage banks and investors to invest in the economy (where they grow), and not to keep on Deposit (where they obviously will be in the red). What he wants to achieve is customized for the economic growth of the country trump. But the use of such a mechanism is a double — edged sword. On the one hand, the Bank really have to pay the borrower a certain percentage because he decided to attract credit. On the other hand, if a customer keeps their savings in the Bank, instead of receiving income, he, however, incurs losses, since the interest on deposits is also reduced.
the Wide use of negative interest rates found during the financial crisis of 2008, though up to this point they were considered a rather exotic phenomenon in the international financial practice. One of the first of them began to introduce Japan. After the economic collapse of both large and small businesses reluctant to take new loans: some use the accumulated in the “fat years” of resources, others understand that is unlikely to be able to pay interest and risk in the future to get into even more debt which is likely to lead to bankruptcy. To credit process managed to run the Central Bank of Japan decided at a negative rate.
Then the mass distribution negative rate received in the EU, which hoped that it stimulates the economy and increase purchasing activity. As a rule, during the crisis period, both the population and the majority of commercial companies prefer to keep their savings in Bank accounts without making large purchases and not investing in new projects. For credit institutions such a situation is extremely beneficial. If money is a dead weight lying on the deposits and their borrowing shows no interest, then banks have to pay interest to their depositors, while the income of the borrowers only fall.
However, do not think that Europe has been enjoying credit Lafayette: everybody can borrow and then another for it and pay extra. Currently in the Arsenal of the ECB, there are three interest rates, but they are used only when interacting with credit institutions. The base rate is at the zero level. That is, the banks themselves may borrow funds from the ECB at 0%. However, the results of the last money borrowed from the public or companies is calculated at a margin rate of 0.25%. Not too much, but to operate at a loss banks are still not going to. But the rate on deposits — the funds that commercial credit organizations deposited at the ECB — in fact negative. For investors, that is, third-party banks that lose less than 0.5%. In other words, the negative rate set by state regulators rather on hand by the banking agencies, rather than to the ordinary consumer.
“Negative rate regulator does not mean that banks give out loans to individuals and companies and pay extra for this money. Borrowing rates still remain at a positive level. But Deposit rates may be negative. In this case, people are essentially paying money for something that keep them in a jar. In this case banks earn on those who have brought the Deposit, and for those who took out a loan,” explains senior analyst at IAC Alpari Vadim Iosub.
Well, what will happen to the key rate in the US? Independent fed Chairman Jerome Powell, as noted above, does not intend to take the salute in front of the trump. Well, if the US President all-taki will find a way to insist on?
Theoretically, the lower rates on the dollar would lead to its weakening of all major currencies, without exception, including the ruble. Experts in the reality of such a scenario is not believe. “The dollar has never been negative rates. His appearance will lead to disaster the entire world financial system. In this regard, a hypothetical fall of the dollar would be the least of your problems. The world is still moving away from the negative shock from oil prices. And the dollar traded all the countries that don’t suspect that will have to pay US for keeping their money in dollars,” explains Iosub.
