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The RBS banking group has warned 1.3 million customers they could be charged negative interest rates if the Bank of England cuts base rates below zero.
The group, which includes NatWest, wrote to its business and commercial account holders about the potential changes, which mean they could lose money even when they are in credit.
The letter said: "Global interest rates remain at very low levels and in some markets are currently negative.
"Dependent on future market conditions, this could result in us charging on credit balances."
The Bank of England's base rate currently stands at the historically low rate of 0.5%, where it has been for more than seven years - and some economists believe it should be cut further to stimulate the economy.
Source: Sky News
From October 1st, the Dutch bank [ABN Amro] is adjusting its conditions to state that the bank can give negative interest rates to account holders with a business checking or -savings account, ANP reports.
Source: NL Times
(Score: 1) by mystik on Thursday July 28 2016, @02:51AM
This little parable is what nailed "Velocity of Money" for me
http://economyblog.ncpa.org/the-tale-of-the-100-bill/ [ncpa.org]
Why aren't you encrypting your mail?
(Score: 2) by jmorris on Thursday July 28 2016, @03:44AM
That is actually a bad example. The fallacy embedded is ignoring the fact the hotel owner is simply a lucky thief. We must assume he lacked the cash to discharge his debt to the grocer without the deposit and the parable breaks down if we assume he knew the hooker would end up with in time to save him from the police. And if everyone realized who owed who they could have deleveraged their debts without the temporary cash injection.
Instead let us use the parable as a basis for a better example. Assume the room rented and the hotel owner rightfully took possession of the $100 bill. If the rest of the story unfolds as told that is a very fast velocity of money. If instead the hotel owner waits until the end of the day and drops by the grocer's, who deposits it with the rest of the day's take and writes a check to his supplier, etc. The speed of that $100 into the local economy is a lot slower. Now if we assume that the supplier is out of town the $100 leaves town almost as quickly as it came in. Or assume the grocer saves the $100 toward a vacation later in the year. Much slower velocity of the money.
(Score: 0) by Anonymous Coward on Thursday July 28 2016, @09:16AM
In my world, there would have been a hand out for taxes at each step.