Wouldn't this cause a run on the banks? Don't know too
much about it, but why would anybody choose to have their money
confiscated by a bank? Seems to be a good reason to justify
bitcoin.
this rate would be for deposits held by ECB on behalf of Euro
Banks. in the US banks recieve 0.25% for their trillions on deposit
with the FED. In order to get the US money 'invested' in the
economy the FED would need to move that rate closer to zero.
keep in mind it pays more to invest with the FED than to buy UST
Bills with a 0.10% 6 month rate (money kept in tbills or at the fed
count 100% in solvency ratios). for Euroland if they go to a
negative rate they are 'expecting/hoping' that the Euro Banks will
lend the money (or invest it in Euro land bonds) rather than keep
it (safe with no principle risk)on deposit. as Bernanke has been
saying, both the FED and ECB are trying to get the banks (and the
public) to put on more risk (vs safe) trades.
The traditional investor, for endowments, pensions, savers, and
so on, was happy with a reasonable yield of a few percent. A common
pension metric was in the 5 to 7 % range.
If the available choices are artificially constrained to
risk(ier) than simple yield of a few percent or no yield and no
principle risk; then a real problem is created.
This would appear to stymie the engine of markets, the efficient
allocation of capital. If bad enough, perhaps even capital flight.
Companies stashing cash overseas is an example.
Nothing good can come of this.
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Wouldn't this cause a run
Bloomberg Reporting ECB Said to Weigh Minus 0.1% Deposit Rate ...
Posted by kalinm on 20th of Nov 2013 at 10:26 am
Wouldn't this cause a run on the banks? Don't know too much about it, but why would anybody choose to have their money confiscated by a bank? Seems to be a good reason to justify bitcoin.
negative deposit rates
Posted by hazbin1 on 20th of Nov 2013 at 11:11 am
this rate would be for deposits held by ECB on behalf of Euro Banks. in the US banks recieve 0.25% for their trillions on deposit with the FED. In order to get the US money 'invested' in the economy the FED would need to move that rate closer to zero. keep in mind it pays more to invest with the FED than to buy UST Bills with a 0.10% 6 month rate (money kept in tbills or at the fed count 100% in solvency ratios). for Euroland if they go to a negative rate they are 'expecting/hoping' that the Euro Banks will lend the money (or invest it in Euro land bonds) rather than keep it (safe with no principle risk)on deposit. as Bernanke has been saying, both the FED and ECB are trying to get the banks (and the public) to put on more risk (vs safe) trades.
The traditional investor, for endowments,
Posted by cubby on 20th of Nov 2013 at 11:33 am
The traditional investor, for endowments, pensions, savers, and so on, was happy with a reasonable yield of a few percent. A common pension metric was in the 5 to 7 % range.
If the available choices are artificially constrained to risk(ier) than simple yield of a few percent or no yield and no principle risk; then a real problem is created.
This would appear to stymie the engine of markets, the efficient allocation of capital. If bad enough, perhaps even capital flight. Companies stashing cash overseas is an example.
Nothing good can come of this.