Negative Interest Rates - Part 1
Monetary review, 3rd Quarter 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.