Negative Interest Rate Policies : Sources and Implications
Against the background of continued growth disappointments, depressed inflation expectations, and declining real equilibrium interest rates, a number of central banks have implemented negative interest rate policies (NIRP) to provide additional mon...
| Main Authors: | , , , |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/08/26680761/negative-interest-rate-policies-sources-implications http://hdl.handle.net/10986/25036 |
| id |
okr-10986-25036 |
|---|---|
| recordtype |
oai_dc |
| spelling |
okr-10986-250362021-04-23T14:04:28Z Negative Interest Rate Policies : Sources and Implications Arteta, Carlos Kose, M. Ayhan Stocker, Marc Taskin, Temel monetary policy quantitative easing bank profitability financial stability negative yields emerging markets developing countries Against the background of continued growth disappointments, depressed inflation expectations, and declining real equilibrium interest rates, a number of central banks have implemented negative interest rate policies (NIRP) to provide additional monetary policy stimulus over the past few years. This paper studies the sources and implications of NIRP. It reports four main results. First, monetary transmission channels under NIRP are conceptually analogous to those under conventional monetary policy but NIRP present complications that could limit policy effectiveness. Second, since the introduction of NIRP, many of the key financial variables have evolved broadly as implied by the standard transmission channels. Third, NIRP could pose risks to financial stability, particularly if policy rates are substantially below zero or if NIRP are employed for a protracted period of time. Potential adverse consequences include the erosion of profitability of banks and other financial intermediaries, and excessive risk taking. However, there has so far been no significant evidence that financial stability has been compromised because of NIRP. Fourth, spillover implications of NIRP for emerging market and developing economies are mostly similar to those of other unconventional monetary policy measures. In sum, NIRP have a place in a policy maker’s toolkit but, given their domestic and global implications, these policies need to be handled with care to secure their benefits while mitigating risks. 2016-09-12T18:57:05Z 2016-09-12T18:57:05Z 2016-08 Working Paper http://documents.worldbank.org/curated/en/2016/08/26680761/negative-interest-rate-policies-sources-implications http://hdl.handle.net/10986/25036 English en_US Policy Research Working Paper;No. 7791 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
monetary policy quantitative easing bank profitability financial stability negative yields emerging markets developing countries |
| spellingShingle |
monetary policy quantitative easing bank profitability financial stability negative yields emerging markets developing countries Arteta, Carlos Kose, M. Ayhan Stocker, Marc Taskin, Temel Negative Interest Rate Policies : Sources and Implications |
| relation |
Policy Research Working Paper;No. 7791 |
| description |
Against the background of continued
growth disappointments, depressed inflation expectations,
and declining real equilibrium interest rates, a number of
central banks have implemented negative interest rate
policies (NIRP) to provide additional monetary policy
stimulus over the past few years. This paper studies the
sources and implications of NIRP. It reports four main
results. First, monetary transmission channels under NIRP
are conceptually analogous to those under conventional
monetary policy but NIRP present complications that could
limit policy effectiveness. Second, since the introduction
of NIRP, many of the key financial variables have evolved
broadly as implied by the standard transmission channels.
Third, NIRP could pose risks to financial stability,
particularly if policy rates are substantially below zero or
if NIRP are employed for a protracted period of time.
Potential adverse consequences include the erosion of
profitability of banks and other financial intermediaries,
and excessive risk taking. However, there has so far been no
significant evidence that financial stability has been
compromised because of NIRP. Fourth, spillover implications
of NIRP for emerging market and developing economies are
mostly similar to those of other unconventional monetary
policy measures. In sum, NIRP have a place in a policy
maker’s toolkit but, given their domestic and global
implications, these policies need to be handled with care to
secure their benefits while mitigating risks. |
| format |
Working Paper |
| author |
Arteta, Carlos Kose, M. Ayhan Stocker, Marc Taskin, Temel |
| author_facet |
Arteta, Carlos Kose, M. Ayhan Stocker, Marc Taskin, Temel |
| author_sort |
Arteta, Carlos |
| title |
Negative Interest Rate Policies : Sources and Implications |
| title_short |
Negative Interest Rate Policies : Sources and Implications |
| title_full |
Negative Interest Rate Policies : Sources and Implications |
| title_fullStr |
Negative Interest Rate Policies : Sources and Implications |
| title_full_unstemmed |
Negative Interest Rate Policies : Sources and Implications |
| title_sort |
negative interest rate policies : sources and implications |
| publisher |
World Bank, Washington, DC |
| publishDate |
2016 |
| url |
http://documents.worldbank.org/curated/en/2016/08/26680761/negative-interest-rate-policies-sources-implications http://hdl.handle.net/10986/25036 |
| _version_ |
1764458202704904192 |