Fascinating times as negative rates become more pervasive ...
ECB policy has had major effects:
- Negative intra-bank rates.
- Negative large-corporate instant access deposit rates.
- Now negative corporate term deposit rates.
- Negative SME deposit rates.
- In some cases, negative pension deposit rates.
- Negative sovereign debt yields for up to 10 year duration in some countries.
- Apart from a tiny number of banks, no effect on retail deposit rates, except rates are marching fast towards zero or 0.01% or virtually-zero for instant access and notice rates.
Where will this end!?
- FT are leading with the story "Negative rates stir bank mutiny". Commerzbank are considering starting to store excess deposits in vaults rather than pay the ECB -0.4% to hold the deposits!
- Meanwhile, German corporate term deposit rates, for 1 year terms have now gone negative. Corporate deposits for instant access deposits, in Germany, and I'm told with some banks operating in Ireland, are already negative. What is new is that term deposit rates are now also going negative.
- Bloomberg reported on "the land below zero" this week on the Danish experience with negative rates.
ECB policy has had major effects:
- Negative intra-bank rates.
- Negative large-corporate instant access deposit rates.
- Now negative corporate term deposit rates.
- Negative SME deposit rates.
- In some cases, negative pension deposit rates.
- Negative sovereign debt yields for up to 10 year duration in some countries.
- Apart from a tiny number of banks, no effect on retail deposit rates, except rates are marching fast towards zero or 0.01% or virtually-zero for instant access and notice rates.
Where will this end!?