Sweden Cuts Deposit Rate to NEGATIVE 0.25

Discussion in 'Economics' started by plugger, Jul 4, 2009.

  1. plugger

    plugger

  2. Illum

    Illum

    And the race to the bottom has begun in earnest.
     
  3. TGregg

    TGregg

    WTF? No way. WTF?

    Negative rates means deflation. Holy moly.

    WTF are they going to do when everybody runs down to the bank and yanks out all their ca$h?

    Naw. Even socialists aren't this stooopid.
     
  4. or, in a way, you could say we just found our winner!

    The race for 2nd place is still on folks, get after it! The banking system isnt going to destroy itself.

    ok maybe it is lol.
     
  5. 1) First of all, not individuals are holding assets with Riksbank but banks and other financial institutions. Nobody is forcing banks to pass on negative deposit rates to customers...
    2) I suppose Riksbank´s step serves the same purpose like similar steps in the US. Banks are hoarding cash and this is more then a "polite order" to let their cash work in another way. ECB is fighting in the moment with the same problem. See also Germany´s threat to banks :

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=168987

    3) You should email a Swedish bank and aks for their credit quotes...:p
     
  6. Lots of consumer and corporate credit in Sweden which depends on business with the Baltic areas can be regarded as close to junk quality. I am not surprised banks are not interested in lending to quasi-broke and risky creditors because their books are already full with billions of the same. First come first serve.
     
  7. This blog demonstrates why placing indiscriminate trust in online commentators is hazardous to your intellectual health.

    The conclusions he seems to draw from the Riksbank's decision suggest that he doesn't have any idea how the money mkts operate. In reality all the Riksbank is trying to do is discourage the banks who will receive money in a 1y unlimited repo from placing them back on deposit with the Riksbank.
     
  8. plugger

    plugger


    Good point Martin. I may have jumped the gun on this one. I think my paranoia of a stamp tax got the better of my judgement. But with all the crazy stuff that has happened in the past year along with very desperate moves by governments, it would not have seemed too far off. Cheers.
     
  9. Does this mean the Swedish banks will now lose 100.25% of the money they lent to Latvia?
     
    #10     Jul 5, 2009