As the European Central Bank looks for ways to stimulate the continent’s lethargic economy, observers are speculating about whether the bank will cut its key interest rate to below zero.
While it may seem like an extreme move, one European economy has already done just that, reports Bloomberg.
Denmark first cut its rate to below zero in 2012. Its central bank has a different mandate than the ECB – it simply has to maintain the krone’s peg to the euro.
The Danish interest rate now stands at -0.75%. Economists surveyed by Bloomberg expect the rate will stay negative until 2017. Danish bank customers aren’t feeling the negative rate directly – instead of charging people for depositing money, banks are increasing service fees instead.
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