12 Feb 2015
European banks adopting negative rates - BBH
FXStreet (Guatemala) - Analysts at Brown Brothers Harriman explained that all that is solid is melting into the air...
Key Quotes:
"Or that's how it feels since several central banks in Europe have adopted negative policy rates."
"Sweden's Riksbank became the latest with today's move (-10 bp). The President of the Swiss National Bank assures us there is a limit, but it is not at the SNB's -75 bp LIBOR target, which is where the Danish central bank has put its key CD rate."
"Many including ourselves, understood zero to be the lower bound for interest rates. Once that threshold was crossed, it is not clear where is the real bottom now. One suspects the hole cannot be very deep as the demand of capital preservation will force investors to look for alternatives."
"At the same time, the interest rate savings for governments by the low and increasingly negative rates help offset the costs of the limited amount of funds really given the debtors (most of the exposure is through guarantees not the actual transfer of funds from say German tax payers to Greece."
"The decline in interest rates, the fall of the euro and the decline in commodity prices, especially energy, must be seen as a net positive for the euro area."
"European governments sold almost $20 bln of paper yesterday near record low yields and even at negative rates yesterday."
Key Quotes:
"Or that's how it feels since several central banks in Europe have adopted negative policy rates."
"Sweden's Riksbank became the latest with today's move (-10 bp). The President of the Swiss National Bank assures us there is a limit, but it is not at the SNB's -75 bp LIBOR target, which is where the Danish central bank has put its key CD rate."
"Many including ourselves, understood zero to be the lower bound for interest rates. Once that threshold was crossed, it is not clear where is the real bottom now. One suspects the hole cannot be very deep as the demand of capital preservation will force investors to look for alternatives."
"At the same time, the interest rate savings for governments by the low and increasingly negative rates help offset the costs of the limited amount of funds really given the debtors (most of the exposure is through guarantees not the actual transfer of funds from say German tax payers to Greece."
"The decline in interest rates, the fall of the euro and the decline in commodity prices, especially energy, must be seen as a net positive for the euro area."
"European governments sold almost $20 bln of paper yesterday near record low yields and even at negative rates yesterday."