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You can put a box with a thousands of dollars under your bed, but a company that needs to hold onto a few million to make payroll can't just put it under their
by bradleyjg 11y ago
You can put a box with a thousands of dollars under your bed, but a company that needs to hold onto a few million to make payroll can't just put it under their collective beds. Maybe they decide to put it in the money market, which invests in commercial paper, instead of a bank which parks it at the Fed.
- SCAQTony 11y agoIf I was a company faced with that problem I look to see if I could take the money off shore and pay through wire transfers if the fees were cheaper than the negative interest rate being charge.
- bradleyjg 11y agoIf the rates go negative enough banks will set up cash management tools where money is held as cash rather than on deposit at the bank (i.e. banks won't be able to lend against it). The existing interbank system couldn't be used for that though, so a parallel reconciliation, netting, and transfer system would have to be set up and dealing with physical cash is fairly expensive (don't forget insurance). I wouldn't expect it unless rates go below -1% and maybe even further.