Money with a Negative Interest Rate

Abstract

A monetary policy with a negative interest rate is a new phenomenon in a life of central banks. The idea of negative time value of money was born at the begin of the XX century. In the 2010s it was implemented by central banks of developed and developing economies. Negative short-term interest rates stimulate an inflation and an economic activity. However is also create risks for financial stability. Consequently, negative interest rates can be applied in very limited scale.