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Negative interest: Danske Bank changes threshold for personal customers
- nocommentguy 6y ago“Bitcoin has no utility”
- bidirectional 6y agoEveryone who bought Bitcoin 2 weeks ago has already experienced far greater negative losses than any Danish bank customer will over the next year. Danes can buy US government bonds quite easily if they want risk-free positive yields.
- rawtxapp 6y agoIn all of Bitcoin's existence, at today's price, there's only few time ranges where you would have lost money, if you just held on, you made it back and then some. Of course, past performance doesn't indicate future, but so far, BTC has performed much better than fiat consistently.
- bidirectional 6y agoWhile this is true, there has actually been no point since Dogecoin's inception where buying Bitcoin was the better option (denominated in fiat, of course).
- rawtxapp 6y agoFor much of doge's existence, it was worth practically nothing and still has very low trading volumes compared to BTC, so you can't easily get in and get out of a position. Tesla was able to sell 200M$ worth of BTC relatively easily, can't necessarily do the same with Doge.
- nocommentguy 6y agoSo how does this invalidate the parent comment’s point? If Dogecoin was a better hold than Bitcoin does that somehow imply that Bitcoin is a worse hold than dollars? And before you lecture about the function of fiat currency, remember the bottom half of society is forced to keep their entire net worth in cash because they are in a continuous financial emergency...
- bidirectional 6y agoIt doesn't. I just don't believe in advocating for regular people to hold highly volatile assets with unpredictable performance. The bottom half of society also hold large amounts of debt, one of the key functions of inflation is eroding the value of that debt. A currency like Bitcoin does not provide for this.
- Black101 6y agoIt goes up and down very much like stocks, gold, etc... if you sell every time it goes down, of course you will incur losses.
- tonyedgecombe 6y ago>Danes can buy US government bonds quite easily Then they are exposed to exchange rate movements.
- Jolter 6y agoBitcoin is many things, but it is not a savings account.
- rijoja 6y agoYou could argue that that is what is best for due to its deflationary nature.
- Svip 6y agoSome context: Denmark has maintained a pegged currency policy since the 1980s, first against the D-mark, then since the Euro. To maintain this, the Danish National Bank needs to maintain inflation, and that usually entails keeping interest rates below what the European Central Bank's interest rate is. I believe the ECB's interest rate is currently 0 or 0.5%, and thus the Danish National Bank's interest rate is negative to maintain the DKK loosely pegged to the EUR. This means, it costs money for regular banks to have their customers' money at the National Bank, and therefore offsetting the cost to their own costumers. Initially, the limited was 750'000 DKK before the negative rates would kick in, then 250'000 and now 100'000. Danske Bank is hardly alone in this, a lot of other Danish banks have already done the same. The slow lowering of the limits is indicator that the banks more and more believe that the negative rates at the National Bank will remain with no end in sight. Disclaimer: I am not an economist.
- airstrike 6y agoAlso not an economist, but topics like this always remind me of the Impossible Trinity and how different countries solve for different pairs of policies out of the three available choices https://en.m.wikipedia.org/wiki/Impossible_trinity https://en.m.wikipedia.org/wiki/Impossible_trinity
- kqr 6y agoI might be biased here, but isn't a fixed exchange rate somewhat of a false sense of security anyway? As in it's great because it reduces volatility of unhedged contracts most of the time, but when it finally goes it tends to do so dramatically?
- legulere 6y agoThere are three main interest rates of the ecb: https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html https://www.ecb.europa.eu/stats/policy_and_exchange_rates/ke...
- IkmoIkmo 6y agoSo there are various ECB rates, the one that's key here is the deposit facility rate. It's the rate at which banks can deposit money with the ECB overnight. This means if there's tons of excess deposits from customers, this rate applies. It's currently -0.5% so banks have an incentive to not become the bank of choice for cash hoarders, plus there's obvious incentives for many banks to try and push its users to other products such as brokerage which many banks offer in some form. This is why you find these negative rates in many more countries in Europe. The Netherlands and Germany, for example. My bank charges negative interest, too, above 100k.
- seibelj 6y agoConsequence of easy money environment. I would say Buy Bitcoin but that goes over on HN like a lead weight.
- lmilcin 6y agoBitcoin is a very volatile investment while people who keep money are looking for extreme safety. Because if they could accept just a bit more risk they could be investing in a lot other things with better returns like, you know, bonds. So no, bitcoin is definitely not a replacement for cash deposit. As to "lead weight", that is very good. There is enough people on HN to see through bullshit and understand Bitcoin for what it is or is not.
- argvargc 6y agoIt is very volatile yes, and over twelve years this volatility has returned a 3x on investment on average, every year. Conversely, for someone deciding between the two, holding fiat has been equally as volatile, and returned a ~66% loss each year by comparison. People looking for extreme safety might want to at least put a tiny bit into Bitcoin or some other crypto. Certainly, they'd be significantly "safer" now had they done so at any point over the past decade.
- Traster 6y ago>People looking for extreme safety might want to at least put a tiny bit into Bitcoin or some other crypto. This. This is why people put money in bonds and gold. It's not a get rich quick scheme, it's an uncorrelated asset. Which BTC absolutely might (heavy emphasis on might) be. BTC is a perfectly valid hedge, but beyond that it's speculation. At the start of 2018 BTC hit around ~17k, it took 2 years to get back to that price and the history of this asset means you can't even expect that to be predictive. So be careful.
- yuvadam 6y agoBitcoin is exactly the insurance policy you want on the possibility of fiat collapse. Also please point me in the direction of these "better-return" bonds.
- x775 6y agoThis is not terribly uncommon in Europe; let alone Denmark. As with the other banks in Denmark doing the very same thing, Danske Bank is merely passing their own expenses onto their customers [0]. There is probably a discussion to be had about where the specific thresholds should be in terms of both stimulating the economy through encouraged spending versus ensuring people save an adequate amount. [0] https://www.nationalbanken.dk/en/marketinfo/official_interestrates/Pages/default.aspx https://www.nationalbanken.dk/en/marketinfo/official_interes...
- nawitus 6y agoWhat other banks do this in Europe (outside of Denmark)?
- cr1895 6y agoMajor banks in the Netherlands do.
- Svip 6y agoI know it is also happening in Switzerland.[0][1] [0] https://www.moneyland.ch/en/swiss-banks-with-negative-interest-rates https://www.moneyland.ch/en/swiss-banks-with-negative-intere... [1] https://www.swissinfo.ch/eng/business/swiss-national-bank_who-wins-and-who-loses-from-negative-interest-rates-/45573032 https://www.swissinfo.ch/eng/business/swiss-national-bank_wh...
- deleted 6y ago[deleted]
- tom_mellior 6y agoIn Austria the Supreme Court of Justice (OGH) specifically ruled that banks aren't allowed to do it. At least for private people's savings accounts. Banks are pretty happy to raise various service fees though, so I guess they'll get creative about getting their money back.
- chefkoch 6y agoSome german banks do it also.
- codeecan 6y agoWouldn't this cause a bank run? Why are people keeping money there if they're getting charged 0.75-1% interest.
- Svip 6y agoSo far, it appears that most people are either willing to suck up the interest or invest them. There aren't a lot of withdrawals going on. Probably still less safe to sow the cash into a mattress than paying about 600 DKK a year per 100'000 you have above 100'000.
- eikenberry 6y agoI'd think the competition would be safety deposit boxes, not a mattress. So it depends on how much the smallest safety deposit box costs per year.
- Ekaros 6y agoToo bad 500€ notes have not been issued since 2 years ago... Makes it much harder to store money as cash...
- vidarh 6y agoA lot of banks explicitly prohibit storing currency that is still in circulation in their safety deposit boxes.
- eikenberry 6y agoIn the US I'd just get a money order from the post office and put it in there. No currency, no expiration, backed by fedgov.
- vidarh 6y agoMaximum per money order is $1000. Couple that with $1.75 per money order, the rental of the box, and needing extra insurance to get the same protection as in a bank account and it might very well be cheaper to accept negative interest in many cases.
- kerng 6y agoChase charges a $15 or $35 (dont remember exactly) minimum balance fee or something monthly - seems like the same idea. Banks are kinda hilarious in what they think they can get away with. So, I'm switching more and more accounts over to DeFi infrastructure over the last year, but getting direct deposit there is still a bit of an issue for employer. The institutions I do like are smaller Credit Unions.
- lend000 6y agoThe problem with Defi is that you can't actually get loans, despite that being the whole purported point. It doesn't replace a mortgage if you need to put down 125% collateral.
- seibelj 6y agoFrom the saver’s perspective it doesn’t matter - it pays regardless. From the borrower’s perspective it lets you get a loan on crypto without actually selling. It is the same principle as a portfolio line of credit except overcollateralized.
- deleted 6y ago[deleted]
- lotsofpulp 6y agoChase collecting money from a depositor for maintaining insufficient money seems like the opposite of Danske Bank collecting money from a depositor for maintaining too much money.
- m00dy 6y agoIf you are a foreigner living in Denmark, it is really hard to get mortgage loans due to unexplainable risks. (e.g. They don't tell you why you are in a risk group. ) Anyway, the maximum amount of deposits is now around 4 months of wage. So, I hardly see the necessity to have a bank account or banking infrastructure. I wish I could join "We don't need banks anymore" motto. But now, It looks like It is becoming a reality.
- lifty 6y agoYou shouldn’t have savings. You should spend it to help the economy /s
- DangerousPie 6y agoThis but without the /s.
- m00dy 6y agoThis is not my first time that I hear about this. Two of my danish friends told me exactly the same without /s :). Why shouldn't I have savings ?
- lifty 6y agoSavings are a drag on the economy. It’s negative aggregate demand and we can’t have that. While I don’t have any proof, I have a feeling that the negative rates environment is making people even more scared of spending money.
- gruez 6y agoIt's hard to tell whether something's sarcastic or sincere in this thread, but on the off chance that you are sincere: >Savings are a drag on the economy Savings don't sit in a vault somewhere. They get reinvested into the economy, providing capital.
- Ekaros 6y agoI'm actually surprised how low the threshold is... 13500€ isn't too much.
- razius 6y agoYou have to consider as well that the typical down-payment for an apartment is around 40k EUR. So it's incredibly frustrating for those that are looking to save.
- jandrese 6y agoThat really is quite low. I guess they don't get the constant PSAs that you should always maintain 6 months worth of salary in savings to handle emergencies?
- jopsen 6y agoYou could also sign-up for unemployment insurance if you live in Denmark. At around 2500 USD / month for up to 2 years, it's a pretty decent deal for average Joe. I think I pay around 800 USD / year for unemployment insurance. In practice, I'll probably never need it though.. so I have considered dropping it.
- sofixa 6y agoThat's significantly less required in most EU countries due to the social safety net, affordable healthcare, public transit, etc. There are fewer types of financial emergencies to cover ( like your house's roof collapsing) and even if you lose your job you get unemployment for up to years while you find a new one. The advice i've heard for France is to have roughly 3 months, preferably in a liquid savings account which even has some interest (0.25% atm, so not much).
- lumost 6y agoThinking this through, as a rational economic actor. You won't save cash in a bank, it's literally better to put it in a safe. You won't buy a productive asset, that'll just lose value as more people buy the same asset - lowering the value of the goods it produces. Which pretty much leaves assets that are inelastic to demand e.g. housing, stocks, art, unique jewelry etc.
- DangerousPie 6y agoYes, the whole point of these ultra-low interest rates is to increase spending.
- Traster 6y agoAs a rational actor, all returns are the same when adjusted for risk, so you continue to stick your emergency savings in the bank, and diversify your less immediate investments. As a real investor you're probably just going to flee domestic investments in favour of the returns of the S&P500.
- CaptainNegative 6y agoAll returns in the space of rational strategies* are the same when adjusted for risk, which is tightly related to those vehicles subject to classical market forces. A lit oven is not a particularly great place to stash your cash, even on a risk-adjusted basis. I don't know the particulars of the situation in Denmark, but they could be intentionally making savings an irrational decision so that rational money flows elsewhere.
- gruez 6y ago>You won't save cash in a bank, it's literally better to put it in a safe. That costs money too. You need a safe, space to put the safe, and bear the risk of the safe getting robbed. Sometimes paying 0.75% might be worth the hassle.
- josh_fyi 6y agoBurglars can crack or steal safes. I wouldn't keep my life savings in one.
- colonwqbang 6y agoI don't understand how the bank incurs an expense by accepting a deposit? Is the bank required by some government regulation to do something expensive with the money? Or is the "expense" just that the bank's profit would decrease when interest rates on loans go down but those on deposits stay put?
- DangerousPie 6y agoThe banks also have to pay negative interest rates to store money.
- airstrike 6y agoInterest rates are invariably linked to exchange rates. You get to pick one of the two to determine the other (assuming free capital flows)
- heipei 6y agoMost banks in Germany do this too, and have been doing it for a while, both for private as well as business accounts. The limits are sometimes well below the €100k insured deposit that you typically don’t want to exceed.
- rdsubhas 6y agoFor context, 100k DKK is approximately 13k EUR or 16k USD. The largest DKK banknote is 1000. This would take 100 banknotes. I'm not talking about affordability. I'm just saying - someone who already has 100k DKK in their bank account could convert it to 100 notes. Realistically speaking – will this policy spur spending, or will people go back to just hoarding cash?
- rijoja 6y agoHoarding cash would be bad since it would loose value due to inflation.
- madsbuch 6y agoWhat? Evidently it looses more value being deposited in the account.
- rijoja 6y agoFirst of all having a negative interest rate is exceptional and this is not true for most of the banks in most of the world. Also there are of course more ways to use cash than to spend it, save it in banks or save it in cash. You could for instance hoard gold or invest in stock instead.
- ur-whale 6y agoA prediction, if I may: the first of many. Post COVID, things will get so bad, this may even happen in the US.
- alkonaut 6y agoTo those surprised by this: do you have lots of savings in regular bank accounts? Why? Why not invest it in some instrument like a 0% fee money market fund with a low yield/risk? I learned "max 2 salaries in a bank account because you are being stiffed otehrwise as the bank doesn't pay interest rate" since I was a kid. It's as much hammered into me as "keep N months salary in savings".
- fridif 6y agoHow about I keep my money in the bank with 0 risk and 0 fee? Why is that not allowed? I just bought a house. Do you know how nice it was to not have to cash out investment accounts and move cash around? I just wired the cash directly, as it should be.
- selfhoster11 6y agoIn that case, the national inflation just becomes your fee since your money loses power in real terms over time.
- fridif 6y agoDenmarks currency will still inflate on top of the 1%
- RobertoG 6y agoWhat are those instruments? Let's say I'm only interested in keep pace with inflation with not risk. I don't know a lot of options nowadays.
- alkonaut 6y ago"Interest rate funds" they are called here. Unsure what the best english translation is. A fund that invests in interest rate carrying instruments like bonds. With a large diverse portfolio you get a small but steady interest similar to a savings account. It is still a fund though - not savings - so obviously there is risk involved.
- madsbuch 6y agoThere are some principal arguments that probably should be surfaced for non-Danish people: In Denmark we have a NemKonto system that forces people to have a bank account. In short, you register an account with the government they will use to make all payments to you (social benefits, return taxes, etc). Most employers also use this system for salary. Practically speaking, it is not possible to live in Denmark without a bank account. Therefore people might see it as a principal right to have a place to have free deposits. Ie. When bank accounts are imposed as they are, they should be outside of the market.
- Kosirich 6y agoGood point. Furthermore SKAT's (danish tax authorities) point of view is they should be aware of all your accounts (DK or away) once you start to have an income in Denmark.
- Svip 6y agoNotice from the DB announced that the 100'000 threshold is only for customers with a NemKonto at DB. If you don't have NemKonto at DB, the threshold is 0.
- hexo 6y agoNow tell me, why should anyone have funds in such bank accounts? Obviously it is cheaper to have money at home under the pillow.
- kreeben 6y agoDon't you know that all people must help all banks at all times or society will crumble? If I don't help my bank with the cost of holding my money then who will?
- imtringued 6y agoIf you withdraw cash you are actually helping the bank.
- LocalH 6y agoNasty dark pattern on this site. The cookie dialog presents four checkboxes, one of which is disabled (being for "necessary" cookies) and all have a check in a small square. However, when clicking on the presumably checked boxes, the background of the box turns blue instead, and the check remains. The "necessary" box does not have a blue background when selected (as it's always selected), but the others do.
- naturalauction 6y agoNot sure what you mean, they are all (except for the "necessary" one) unchecked by default. I just clicked "OK to necessary" and it worked fine.
- LocalH 6y agoCorrect. But there is the visual impression that they are all checked by default. I could see a less savvy user clicking on them and them selecting "ok to selected" thinking "well, I deselected the rest of them", due to the difference in background between necessary and the other three buttons when selected. Maybe "nasty" was a bit hyperbolic, I will admit, but it has the potential to be confusing.
- zem 6y agosurprised you'd call that a dark pattern - it's one the best cookie popups i've seen. it had four clearly labelled boxes, the one you needed was checked, the optional ones were unchecked by default, and all four boxes were presented up front, not checked by default and hidden behind a "see advanced options" link. there was also a large and clear button to say "ok to necessary" that changed to "ok to selected" when i clicked to allow functional cookies, and at no point tried to trick me into clicking "ok to all" instead. in fact the only nudge towards selecting "ok to all" was the fact that it was a dark bold blue and "ok to necessary" was a washed out grey.
- InvOfSmallC 6y agoI have Danske Bank, but I'm changing. It was the bank given by my employer to me for free, but it's the shittiest bank with the shittiest customer service I ever used. They deserve to fail.
- teekert 6y agoWow, talk about a dark pattern, all checks but the necessary ones are checked by default, which looks good, but then the big green button will check and accept them anyway! So the primary option negates the standard settings! I almost fell for it but I'm getting better and better at catching myself. It's the new online advertisement. I remember my grandma being completely flustered by all the "you're the 10.000th visitor" flashy stuff and my brain ignored it completely. In this vain my brain now hunts for that button that does not really look like a button but just enough to identify it as a button. That is the one to hit.
- razius 6y agoI find it even more infuriating considering that the money doesn't exist physically, it's just some numbers in the computer.