Negative Interest Rates - Part 1

Monetary review, 3rd Quarter 2012

Authors Jørgensen, Anders; Risbjerg, Lars
Subject Danish Economy
Type Monetary Review  
Year 2012
Published 23 October 2012
In early July 2012, Danmarks Nationalbank lowered its monetary-policy interest rates to historically low levels. The rate of interest on certificates of deposit was reduced to -0.20 per cent. This means that the monetary-policy counterparties are paying for placing liquidity in certificates of deposit with Danmarks Nationalbank. For the first time in its nearly 200-year history, one of Danmarks Nationalbank's interest rates is negative. Negative monetary-policy interest rates are also unique in an international perspective. This article describes the background to negative monetary-policy interest rates, the adjustment of monetary-policy instruments and the transmission to the market.