BIS warns of falling interest rates on bank deposits – Investing.com Spain

Arantxa Iñiguez

Frankfurt (Germany), March 6 (EFE) .- The Bank for International Settlements (BIS) said that interest rates on bank deposits to retail customers have not fallen below zero but warns that what is unknown will happen if they go down more.

in its quarterly report March, released today, economists BIS analyzed in a special feature the negative interest rates.

Morten Bech and Aytek Malkhozov examine the implementation until the end of 2015 interest rates below zero the European Central Bank (ECB) and the central banks of Denmark, Sweden and Switzerland.

the Bank Japan (BoJ) was left out of the study to be adopted in January this year a negative rate applicable to part of bank reserves.

the authors analyze whether the negative rates have been transmitted to other interest rates of the economy and how they have done.

they conclude that “when implementing negative rates, central banks have tried to alleviate the burden for banks”.

for instance, the four banks analyzed, all but Sweden applied negative rates only bank reserves at the central bank above a certain threshold, above the minimum requirements.

“in all cases, moderately negative rates moved toward money market rates and to longer maturities of the yield curve, while its impact on other rates, especially banking, was much less apparent, “according to the BIS.

rates on bank deposits to retail customers have not fallen below zero and in fact mortgage rates in Switzerland have grown in recent months, as banks try to preserve their profits.

“There is a great uncertainty about the behavior of individuals and institutions if rates go deeper into negative territory or if they remain negative for a prolonged period, “experts warn BIS, headquartered in the Swiss city of Basel.

p “it is unknown whether the transmission mechanisms (monetary policy) will operate as in the past and will not be subject to critical moments,” says BPI.

in addition, the possibility that interest rates fall further in the future has been an element of concern in financial markets in the second phase of turbulence experienced this year in early February.

There are fears that if rates fall further, affecting “seriously intermediation margins, profitability and resilience of banks “, he said the head of the monetary and economic Department of the BIS, Claudio Borio, in the report.

” the concern deepened and spread following the decision of the Bank of Japan to adopt negative rates of official interest, “said Borio.

the purchases of government bonds by central banks have done that, at a given moment, reached traded debt securities sovereigns with negative returns in excess of 6.5 billion dollars (5.9 million euros) value, according to figures from BPI.

the ECB governing council meets next week and approve, predictably, more monetary stimulus for the euro area.

the markets expect the ECB will decide to cut more your interest rate deposit, located at -0.30%.

it is possible that the ECB will apply a negative interest rate to tiered deposits from certain quantities, so that only penalize the highest deposits and do not make the smallest amounts, according to some analysts.

currently, the Riksbank (Swedish central bank) applies a rate of -1.25% deposit, the Swiss National Bank (SNB) of -0.75% and Danmarks Nationalbank Denmark’s -0.65 %.

the BPI, which is the bank of central banks, the report adds that negative interest rates has not affected trading volumes in the money market in the euro area, which have remained stable.

also the negative rates have improved market access of banks of countries on the periphery of the euro area.