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So people are willing to accept small negative rates if it would be less than the operational costs of shipping enormous truckloads of bills around, storing the
by csense 7y ago
So people are willing to accept small negative rates if it would be less than the operational costs of shipping enormous truckloads of bills around, storing them, securing them, and insuring them against theft / fire? Is that's what's going on here?
- dcftoapv 7y agoThat's kind of the thought, yes. Negative rates should not be sustainable for any significant period of time and most interest rate models are built on that assumption.
- dcftoapv 7y agoSorry, I want to clarify quickly that appleiigs is right that it isn't cost of insuring cash so much as depository risk. When I say cash, I mean currency as opposed to debt/equity, not physical bills.
- xiphias2 7y agoCan you even get a significant amount of money in truckloads of bills? If you would try it, you'd be surprised how much the banks would push against it.