What are negative interest rates?

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I’ve seen some countries have negative interest rates?
How does this work ?
Does this mean the bank charge you for keeping the money there ?
Does this mean you can borrow money “for free”?
Thank you in advance.

In: Economics

1 Answer

Anonymous 0 Comments

First of all it mostly means that banks have to pay money to keep money at the central bank. Some banks will further this to their customers but usually its only if you keep more than amount x with them but they dont have to and often dont do it because it is very unpopular.

Does this mean you can borrow money for free? No not realy. There are some special situation where large companies will have this option but in general you will still pay a bit of interest though lower than when interest rates are positive.