A large part of the international financial circuit has long been characterized by negative interest rates. Opened by the central banks of Sweden and Denmark, this unusual scenario has acquired an international dimension since June 2014 with the decision of the ECB to position the remuneration paid on overnight deposits received by banks in negative territory. Last February this orientation was also shared by the Bank of Japan.
The Federal Reserve, on the other hand, continues to positively remunerate the excess reserves held by credit institutions. Despite the increase in the required burden (to -0,40% since last March), the deposits of eurozone banks with the ECB increased to record levels. This trend is determined by the growing amount of negative yielding sovereign bonds, a consequence of the purchase policies implemented for some time by numerous central banks (ECB and BoJ in the lead). A sharp fall in yields has also been observed in the corporate bond market for some months.
As the months go by, the debate on the appropriateness and effectiveness of this monetary policy approach grows. Those who support it point out that the decline in financial returns is not a recent phenomenon but it began a few decades ago: the problem is not low rates but deflation which, if continued, makes any form of debt unsustainable. Conversely, those who take a critical position believe that the ECB's choices undermine the development prospects of the Eurozone because they prevent the unfolding of the "creative destruction process", i.e. the one that leads to the elimination of companies without prospects and at the same time opens up spaces for development of companies with innovative potential.
