Negative interest rate Accounting, Finance, SPSS Essay

Negative Interest Rates
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Negative Interest Rates
Negative interest rate
Negative interest rates take place when borrowers are credited interest instead of the interest being paid to lenders. It is an unusual scenario that is highly likely to take place in the event of a deep economic recession when market forces and monetary policy have pushed their interest rates to the nominal zero bound (Lopez, Rose, & Spiegel, 2020). In such cases, it means that cash deposits stored at a bank incur a charge instead of receiving interest income. Such trends have been common in Europe, the United Kingdom, and the U.S in recent times due to economic recessions in the markets.
Negative interest rates happened in the EU
Interest rates in Eurozone turned negative in 2014, and this has since sparked a debate on whether or not this is economically sensible. For instance, such cases are evident in Germany (de Groot & Haas, 2020). The national government is paid so as borrow money and consumers in the country enjoy a money-for-nothing rate if considered adequately solvent. Lenders are currently giving one-year loans amounting to $1100 for an interest rate of -0.5%, meaning that one is only required to pay back $990. Similarly, one can take a mortgage worth €250,000 for 10 years at an interest rate of around 0.52%.
The current state indicates a scenario of negative interest rates in the economy. Such cases in Europe started when the ECB was fighting the global financial recession that resulted from the collapse of the Lehman Brothers B...