Photo: Arnd Wiegmann / Reuters
Swiss banks have started to lend at a negative rate, according to Bloomberg. This became possible thanks to the super soft policy of the local Central Bank.
The interest rate of the Swiss National Bank is currently installed on the negative level of minus 0.75 percent per annum. In these circumstances, the Central Bank accepts deposits from credit institutions of the country — they have to pay the regulator for storage of surplus funds.
To prevent unnecessary expenses, banks tend to place surplus funds in loans. In some cases, they are ready to offer some customers a negative rate, but more favorable compared to the rate of the Central Bank. Thus, borrowers benefit from the loans and are obliged to return is smaller than took.
The interviewed bankers note that such conditions are only available to institutional investors: banks, insurance company investment funds. They also fear that the continued policy easing by the Central Bank in the form of further reduction in rates can result in a bubble in the financial market.
Video, photo All from Russia.