eli5 What does it mean that japan had negative interest rates?

Question

I understand that this is designed to stop deflation, but what does it mean practically speaking?

In: Economics

Answer 1

I think there might be some misunderstanding, consumer banks most likely don’t have negative interest right just very low ones. It’s rather the central bank that does. What this means is that when banks create money, which they do by lending from the central bank they have negative interest on those loans. This encourages investment because the central bank encourages banks to spend and create more money. Sweden has had negative interest rates for most of the 2010s just recently increasing it to counter inflation.