Bank of England - Negative Interest Rates
 

This could be a game-changer :2 cents:

http://www.bbc.co.uk/news/business-21589128

"Bank of England deputy governor Paul Tucker has said negative interest rates should be considered.

The Bank rate has been at a record low of 0.5% for almost four years.

A negative interest rate would mean the central bank charges banks to hold their money and could encourage them to lend out more of their funds.

Speaking to MPs on the Treasury Committee, Mr Tucker said: "This would be an extraordinary thing to do and it needs to be thought through carefully."

He said it was an idea he had raised as one of the possible alternative ideas to boost the economy.

"We will be thinking about whether there are any constraints on setting negative interest rates," Mr Tucker told MPs.

With interest rates at a record low, there is little scope for central banks to use conventional means to stimulate the UK's weak economy, which has dipped in and out of recession since the 2008 financial crisis.

The Bank has resorted to so-called quantitative easing (QE), pumping billions into the economy. Minutes of the last meeting of the Bank showed that the governor, Sir Mervyn King, was outvoted in calling to expand QE from its current level of £375bn.

Negative interest rates have been discussed by other countries. Negative rates would have a detrimental impact on savers, who have already seen the income from their savings fall since the financial crisis.

In 2009, the Swedish central bank, the Riksbank, surprised many when it set a rate of -0.25%. The move below zero for the first time was seen as largely symbolic.

That was on the deposit rate, the rate put on money left by commercial banks at the central bank, which it normally earns interest on.

Banks were, in effect, being charged for keeping money at the central bank rather than lending it out to consumers and businesses to boost consumer spending and growth.

In December, the Swiss bank Credit Suisse imposed negative rates on bank deposits to tame demand for the Swiss franc. "

Na, go for it. Who cares about those pesky "savers" anyway?

I renewed my mortgage on my house in Scotland 3 months before shit hit the fan, I got a tracker mortgage at 0.3% above the base rate, ever since late 2008 I have been paying only 0.8% interest on my mortgage. Just from interest alone my mortgage dropped more than $400 per month as the Banks reduced the rate. They call me every 3 months trying to trick me into changing my mortgage by offering me a cash lump sum or a vacation or some other crap, the sales guy gets all pissed off when I do the math back to him to show how ridiculously stupid it would be for me to change it, they usually end the call very quickly. I must admit, I look forward to the calls, it brightens my day to know how desperate they sound to get me off this mortgage, even better is it's a lifetime tracker, I can end it anytime with 2 months interest payment ( which is about $100 right now lol) but they can't do shit about it to get me off it. My broker really hooked me up on that one.

I can only imagine some other people who don't take time to think it over and maybe jump for the cash lump sum then end up being screwed long term with paying back double or even triple whatever cash lump sum they got.

My bank already effectively pays negative interest. They charge me 5 bucks a month to take care of my $.

Love it Ross, you've done well :thumbsup My bank tries to trick me into things too, the last time offering an IPad, but I know straight away something doesn't smell good :error

Is it too much to ask for currency to be backed by something of value?

These guys have a better way :1orglaugh