The Bank of Japan recently shocked global financial markets once again last week with its decision not to pay out any more monetary stimulus for its struggling economy. But that’s hardly the most stunning decision it’s made this year.
In February, Japan made the controversial move to adopt negative interest rates for the first time ever, in the hopes of shocking its sluggish economy into action. Negative rates have also been adopted by some European countries, as well as the European Central Bank.
Why should we care here in Canada? Well, the Bank of Canada said in December that Canada could also adopt negative interest rates if the nation faces an economic crisis. It’s never happened here, and it may be a long shot, but here’s a primer on what negative rates would mean.
What are negative interest rates?
Think of a loan that works in reverse: instead of you paying interest to borrow the money, the bank pays you to borrow. So if you borrow $1,000 at a 1 per cent interest rate, you oweRead More »from Negative interest rates aren't likely in Canada, but here's what that would look like, anyway