A success. But a success that erodes over time. Negative interest rate policies have reduced borrowing costs and increased borrowing volumes, while their costs in terms of financial stability and market distortions appear modest, says Alexandre swoboda, Honorary Professor at the Graduate Institute of International and Development Studies (IHEID) in Geneva.
However, research shows that not only does their effectiveness fade over time, but the deleterious effects tend to increase, nuances the economist in an article co-authored with Théodore Renault and published Tuesday during a seminar of the International Center for Monetary and Banking Studies (CIMB). The authors look at the Swiss, but also Danish, Japanese and European experiences, where central banks have ventured into negative territory over the past decade.