Sverige kan ha negativ ränta då man nästan lämnat kontanterna som betalningsmedel. Inom Euro området är det helt annorlunda.
Andy Haldane, a member of the Monetary Policy Committee (MPC), the UK’s equivalent of the FOMC suggested that to achieve properly negative rates, the abolition of cash itself might be necessary.
This is one reason why negative rates have been used in Nordic economies, where societies are already close to cashless. Even sellers of Sweden’s version of the Big Issue magazine - Situation Stockholm - are able to accept payment via debit or credit card.
Traditionally, it was thought that if you wanted to boost the economy, the central bank would reduce its interest rates. Normally, the rates offered on savings accounts would follow, and people would choose to spend more, and save less.
But there’s a limit, what economists called the “zero lower bound”. Cut rates too deeply, and savers would end up facing negative returns. In that case, this could encourage people to take their savings out of the bank and hoard them in cash. This could slow, rather than boost, the economy.
What is happening now should not – according to conventional thinking – be possible.
As central bank rates have turned negative, the rates offered on bank deposits have followed. Yet rather than stuffing cash under mattresses, people have left their money in the bank or spent it.
Nowhere is the experiment with negative rates more obvious than among Nordic central banks. Sweden – the first to dabble with negative rates – is perhaps the prime candidate for such experimentation.