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Central Banks are clustering negative interest rates as a new fashionable monetary policy tool. After Sweden, Switzerland and Denmark, the new fellows are the Bank of Japan and the European Central Bank.
The ECB has cut a key rate further into negative territory in March 2016. It now charges banks 0,4% to hold their cash overnight. Draghi said that the central bank’s stimulus measures are intended to last until March 2017 or longer if necessary.
The Bank of Japan has also adopted the negative interest rates strategy. It is now charging banks 0,1% for parking additional reserves, with the aim to encourage lending and prompt businesses and savers to invest.
It seems that central banks are all seeking a weaker exchange rate without weighing the risk of an open currency war, losing their ability to boost prices and competitiveness through currency devaluation.
Negative interest rates reduces the cost of borrowing and perhaps should spike demand for loans. Jana Randow and Simon Kennedy [1] noticed:
that when banks absorb the cost themselves, it squeezes the profit margin between their lending and deposit rates,
and might make them even less willing to lend. (...) negative rates haven’t spa
[/1]…
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zarina avatar
zarina 16 Kwi

good work!!! Thank you

black_box_xx avatar

great! thank you for your article :)

Kivetat avatar
Kivetat 19 Kwi

Good job))

rajib217 avatar
rajib217 23 Kwi

Great article

TaniaS avatar
TaniaS 5 Maj

Very interesting!

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In the near future, perhaps we will see the nice big face of Angela Merkel in the 1 euro coin?


In this article, which is composed of 4 parts, I want to focus on what the EBC could do in the coming months to try to get out of the crisis which is stagnant in europe.
Mario Draghi spoke last conference of non-conventional measures, implying that the ECB would take into consideration the QE.
We see in this first part, what is QE?
Stripped of jargon sophisticated (and mystifying), the QE (quantitative Easing, QE) simply means increasing the quantity of money supply, or easing credit conditions in the hope of stimulating the economy stagnant. It is usually performed by injection by the central banks of a certain amount of money into the coffers of commercial banks in exchange for its financial assets, which consist largely of government bonds. Although typically is done electronically or on paper, its practical effect is identical to that which is obtained by printing money.
This would be an expansionary monetary policy designed to aid economic recovery. The rationale behind this policy is that the addition of new funds to t
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