Banks are offering Negative interest rates! will this help BTC

[Vishnu.Reang]

I don't know why anyone would agree to a negative interest rate, when the retail inflation remains in positive.

because they usually have no other option. they aren't just going to pull their money out of the banks and put it in their mattresses! that wouldn't be safe nor convenient. we have to use banks since we are stuck using fiat and knowing that we need them they can do anything they want.
that is why they are scared of bitcoin, because they know bitcoin showed people that they can not-need banks!

I have to agree with you on this. As of now, we are stuck with using the banks and there is no other safe option. I thought about a few other options, such as converting some of the cash to gold ETF. But the liquidity will be lost and in case we are faced with some emergency expenses then we'll incur even more losses when we convert the ETF back to fiat cash. So I agree, we have no other option.

But one question. A negative interest rate of -0.25% or even -0.5% may be OK for now. But what you'll do in case they further decrease the rates. Will you be OK with -2% or -3% per year? There is no guarantee that they'll not do that.

[avikz]

Negative interest rates+inflation are awesome for the people and companies with big amounts of debt.
The problem is that the economy is addicted to debt and negative interest rates make it even more addicted.
I think that keeping negative interest rates is good news for bitcoin,but sooner or later,the bankers are going to go something in order to destroy the crypto competition.

It's not actually awesome in a way that you think! It has severe impact on the economy. Banks are the still the main pillars of the economy as it controls the public money and majority of the common people still use banks for depositing their money, thinking it is a secure way to do it. Now think this similar situation from the perspective of a common man who deposits more money in order to get less amount at a later date. Banks are going to earn from the difference in interest rate anyways, their strategy is not going to change. They will probably offer -5% interest rate for checking accounts and -3% for borrowers. Their income is a straight forward 2% no matter whatever the market prevailing interest rate is!

Bitcoin is supposed to be benefited from the negative interest rate regime. But the main beneficiaries are precious metals like Gold, Silver or Platinum. If you look at the price chart of Gold from last one year, the trend will be clear to you! Check the below link,

https://goldprice.org/gold-price-chart.html   

[pakhitheboss]

Wow!
These countries have a surplus amount of reserve cash and that might be one of the reasons they are giving a negative interest rate. Good opportunity for anyone to invest in Bitcoin or the local stock market. I say, its a great opportunity for a fund manager to create funds that are investing in the third world country.

That is why there are lots of Bitcoin Investors based in these countries. Any country that has got an economy issue, a citizen from those countries will invest in Bitcoin.

[jaocoincrypto18]

I can't say directly if this will favor the Bitcoin but i could say that this is bad for the banking industry as the banks are alive because of the loans with interest. Except if these countries are just helping their people in talking of entrepreneurship thru bank financing with negative interest then it will probably help Bitcoin as people could buy more Bitcoin and used it to build businesses with the support of the banks.

[kryptqnick]

I pulled/quoted some of the article under the link

https://www.yahoo.com/finance/news/negative-interest-rates-japan-germany-france-150324580.html

"What if I said I wanted to borrow $100 from you and pay you back $99 five years later? Would you do it?

Hell no!

And yet this is exactly what’s happening right now in the banking systems of Japan, Germany, France, and other European countries.

Negative interest rates — where the lender gets paid back less than they’ve loaned — now add up to 30%, (and counting), of the global tradable bond universe, according to JPMorgan (JPM). You may have seen for instance that Germany just sold the first negative yielding 30-year bond issue.

Well, Japan is a special case, because they have deflation. Their fiat becomes more and more valuable with time (I think it was not done on purpose, and people mostly think it's a problem but that's how it works there), so it makes sense that one should pay back less that one borrowed. As for countries with a stable inflation rate, it seems that the lender loses significantly in this case, but I can see how people might be interested in that. It's just like discounts and promotions. If nobody wants to buy your product for a certain price, you make it lower, and then people buy it and probably even more stuff they never intended to buy. Likewise, if nobody wants to loan from you, and you really need an active flow to get going, you make a negative interest rate.

[salty]

Interesting of course is the comparison of traditional deposits with bitcoin.There are many contradictions in these conditions.I am surprised of course such an absurd situation.In this case, it makes no sense to invest in a Deposit.But whether there is a better choice as an alternative to choosing bitcoin, I don't know.Although if we consider bitcoin as a long-term investment (30 years) then I think it makes sense.By and large, those countries that treat their Klients this way, paying them even less than the amount that they invested, create pre-links so that people themselves look for an alternative. And as you know, an alternative more than promising is Bitcoin.Slowly many are beginning to realize this.

[bitart]

Paying for the bank to hold your savings is known for a really long time in Switzerland. They have an independent banking industry and they're (the Swiss banks) nearly the only trusted banks by the richest people. If all the economies collapse, the Swiss banks will remain and will hold the savings in their national currency (Swiss Frank, CHF) and it will preserve the value.
Those people only trust these banks to hold their money, because they don't want to lose any of the value of their saving over the time. This is why Swiss banks could offer negative interest rate, because they're so trusted, and the demand is very high for their services, so they can just directly charge their cost with negative interest rate.
German bonds are pretty similar, Germany has a really good economy (on the long run), so people trust them enough to buy bond with negative interest rate because people speculate like the normal economies will fail, currencies (not EUR but the others) will lose a part of their value in a recession, so if you buy German bond even with negative interest rate will help them to preserve the value of their savings...
This is a signal for a coming recession or for a coming financial crisis... no one knows this for sure, but this is a signal...

[potificate]

I pulled/quoted some of the article under the link

https://www.yahoo.com/finance/news/negative-interest-rates-japan-germany-france-150324580.html

"What if I said I wanted to borrow $100 from you and pay you back $99 five years later? Would you do it?

Parents do it all the time... "I'll 'lend' my son Jimmy the money to help him out." Of course many times, that is a 100% negative interest rate ;-)

[1Referee]

But the main beneficiaries are precious metals like Gold, Silver or Platinum. If you look at the price chart of Gold from last one year, the trend will be clear to you! Check the below link,

Did you see Bitcoin's trend this year? It's still up like 130% after a 43% correction. If we go back in time exactly one year; Gold is up ~26%. Bitcoin is up ~22%.

What usually happens is that when investors think certain events may affect the price of Gold, or even Bitcoin, they'll buy into it hoping that those who seek a safe haven asset do so too and further inflate the price. In other words, investors are front running future demand. It happens in every market pretty much.

Looking at the Gold price right now, it seems that it has topped out for now and is consolidating sideways. I'm kinda leaning towards a retest of the lower $1400 area or even $1350, which would provide a nice entry point. Just like Bitcoin, Gold won't keep going up endlessly without a solid correction every now and then.

[Artemis3]

Paying for the bank to hold your savings is known for a really long time in Switzerland. They have an independent banking industry and they're (the Swiss banks) nearly the only trusted banks by the richest people. If all the economies collapse, the Swiss banks will remain and will hold the savings in their national currency (Swiss Frank, CHF) and it will preserve the value.
Those people only trust these banks to hold their money, because they don't want to lose any of the value of their saving over the time. This is why Swiss banks could offer negative interest rate, because they're so trusted, and the demand is very high for their services, so they can just directly charge their cost with negative interest rate.
German bonds are pretty similar, Germany has a really good economy (on the long run), so people trust them enough to buy bond with negative interest rate because people speculate like the normal economies will fail, currencies (not EUR but the others) will lose a part of their value in a recession, so if you buy German bond even with negative interest rate will help them to preserve the value of their savings...
This is a signal for a coming recession or for a coming financial crisis... no one knows this for sure, but this is a signal...

I don't know if they are, but sounds like full reserve banks, where the entirety of your money is always there. Think bank vault instead. And this of course requires a fee for keeping that inside the vault without ever touching it until you want it back.

Most banks in the world do not do this, sadly they use fractional reserve, which is a form of legalized ponzi scheme, since they use your money for their interest, they pay you to give you an incentive to not withdraw your money...

Because if enough people withdraw their money, the bank has no way to respond, since the money isn't there anymore. At least not the whole of it, only a small "fraction". The only reason you don't see banks going bankrupt more often, is because they also came with the idea of a bank of banks that works with the same principle, called "The Central Bank". And to break that, a % of the population in that country would need to withdraw at the same time. But wait! they also made a World Bank just in case... which means... I hope you get it, if the world starts withdrawing, the bubble pops and everything collapses.

Which is why, it is wise for you to learn about the only school of economy that advocates the use of deflationary money, the Austrians: https://mises.org/books-library

Then you will understand where everything fits.

Should you get rid of your fiat for bitcoin or metals? Absolutely, leave in those Ponzi banks only the absolute minimum. It might not happen in your lifetime, but if it does, you will belong to the few that acted in advance and protected your funds by moving them away from fiat. You can also go with some more old fashioned assets like properties and such, but the main point remains: As little fiat as possible. Money in the bank is money at risk, think of a bank like an online wallet, very dangerous, could disappear tomorrow without warning (and yes, banks have gone before, leaving the people without their money).

But of course they want you to depend on them, their life depends on it...

[teosanru]

I pulled/quoted some of the article under the link

https://www.yahoo.com/finance/news/negative-interest-rates-japan-germany-france-150324580.html

"What if I said I wanted to borrow $100 from you and pay you back $99 five years later? Would you do it?

Hell no!

And yet this is exactly what’s happening right now in the banking systems of Japan, Germany, France, and other European countries.

Negative interest rates — where the lender gets paid back less than they’ve loaned — now add up to 30%, (and counting), of the global tradable bond universe, according to JPMorgan (JPM). You may have seen for instance that Germany just sold the first negative yielding 30-year bond issue.

In case you’re wondering, yes, this is crazy.

“It’s really unusual and really distorting the global financial system,” says Torsten Slok, chief economist at Deutsche Bank Securities (DB). “I spend all my time talking about it.”

This is not going to end well

Negative rates are counterintuitive, unprecedented — and to my mind — mind-bendingly insane and downright scary. They are like a parallel universe where everything you’ve ever learned about finance and human behavior is turned upside down. ..."



Note I was amazed to read this new twist on reality.


Can you imagine buying a negative yielding 30-year bond issue?

I can't but germany did wtf?

Well for an instance it would look fancy to people thinking of the fact that you can take a loan for yourself worth 100$ and return back $99 after 5 years. But it's a catch here. Interest rates on Loans are set to compete with inflation in the economy. Which means the rate of interest is a bit higher than rate of inflation. Now, In a scenario of negative interest rate signifies deflation in Economy. Which means thing would get cheaper in future. So the banks adjust themselves to set a rate less than deflation rate to gain more. But this situation of deflation is short lived maybe for a year or two because economies can't survive on deflation. Either it will self balance itself to a mode of equilibrium or an Budgetary Injections would be needed to increase aggregate demand otherwise economy would implode. If you think it in a wide picture yes it might help btc because economies won't be able to run in such a situation but this is a self rectifying situation so it might not have any real impact on btc.

[Pab]

Rates below zero and QE means inflation
In a case of inflation bitcoin price will increase same like in a case of QE. With lot of printed money apetit on risk is increasing
 Generally fiat currencies are losing his purchase power that is maybe reason why bitcoin price is rising overall

[Zionatin]

I don't know why anyone would agree to a negative interest rate, when the retail inflation remains in positive.

because they usually have no other option. they aren't just going to pull their money out of the banks and put it in their mattresses! that wouldn't be safe nor convenient. we have to use banks since we are stuck using fiat and knowing that we need them they can do anything they want.
that is why they are scared of bitcoin, because they know bitcoin showed people that they can not-need banks!

Thank you for explaining this I was confused. Wow banks are evil AF. I have always thought so but man this is just cheeky. I think I will start protecting peoples money from my home and buying a huge security system and some massive dogs. That is what it will come to, private unofficial banking or simply to crypto which is where it will really go. People will rather hold their funds in crypto and it will have to be some sort of stable coins though I do not even understand how stable coins work. Perhaps it can be tied directly to the value of the USD or gold or something? Even with negative interest as a deterrent I still think most people will take that over crypto volatility.

[mr3dds]

I am not fully understanding this. Slight inflation is good for economy in some way and negative interest would be disaster.
However, they must have thought it through a lot. Don't know how it will end.
Let days say their words.

[nara1892]

Negative interest rates will make people lazy to save money in the bank, they will find out safe and profitable ways to save their money
of course this will have an impact on bitcoin, they will save money in bitcoin because saving money in banks with negative interest rates will only reduce their money.

[Mike Mayor]

I am not fully understanding this. Slight inflation is good for economy in some way and negative interest would be disaster.
However, they must have thought it through a lot. Don't know how it will end.
Let days say their words.

They basically want to charge us to "protect" our money. Se we pay the bank back 1% a year. It's an absolute joke. It is cheeky as hell. The bank will ask you even at prime maybe 10% and that is a very good rating. That is not enough and they want to make more so they decide not just to not give interest but to charge it too. Mostly the bank gives 5%-8% interest for you and loans it for 10%-22% so they already make
10%-5%= 5% and 22%-8%=14% so they make between 5%-15% on peoples holdings when they loaning it. Now they talking about going down form 5%-8% to -1% that is a crazy amount.

If this happens people will have little reason to use banks and it would be better to just invest your money. It will lead to more people investing in things. Better to hold stocks that will slowly increase or even stay the same over time than risk a guaranteed -1% with the bank.

[randegibran]

Bank always give negative effect for costumer but they have other option how to keep money safe, by saving in bitcoin maybe bank will be less interested and many people want to hold their assets in bitcoin.

[shooleh]

Bank, in my opinion, is just a place to save money, of course, we will be hit by interest rates. I know Bitcoin, I prefer my money to buy Bitcoin and Altcoins. Although in this industry it has a risk, it is able to generate many advantages when compared to the Bank.

Perhaps in the future will be more people who choose Bitcoin to place investments. Bitcoin has a very good development and can be used for payment media. We know already many large corporations adopt much of Bitcoin. Bitcoin is a good payment and makes a profit.

[qwertyup23]

<snip..>

If I remember correctly, the reason on why the Japan's Central Bank imposed negative interest rates was to encourage its people to spend since most of them are saving their money either in the bank or on their respective houses. Due to this phenomenon, there lacks an inflow of cash in the economic machinery which makes the prices lower and cheaper BUT no one spends their money.

This would be a good opportunity if Bitcoin were to be introduced as an investment alternative since people would be spending and purchasing bitcoins, just like what they are currently doing. It would be a both win-win situation to their economy and to the price of bitcoin as well.

[error08]

There’s been a domino effect of monetary policy of high-interest rates for centuries creates an unstable economy that occurs among the people due to the massive amount of debts. The central bank has been stockpiling so much money for centuries which could giveaway to low-income residents. Negative interest rates motivation was to refinance the government, corporations and even citizens to stimulate the economy in order to battle the global financial crisis and to counter inflation in their currencies. Countries in Europe such as Switzerland, German, Denmark, Sweden and from another side of the world, Japan have allowed rates to fall slightly below zero as they have low inflation, it's a good solution though.