Negative interest rates will destroy the banking sector. They undermine bank profitability and create a distrust among depositors. Negative savings rates will not revitalize aggregate demand, but rather curtail it, and will ensure continued under-investment in the economies that adopt them. Days after Japan unexpectedly adopted negative rates, Janet Yellen testified in front of Congress, and re-opened the possibility of negative rates in the United States. If pursued, it would be unprecedented in the U.S. and a colossal mistake.
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