Swedish central bank to charge negative interest rate

Sweden's central bank, the Reichsbank, has lowered its interest rate from 0.5 percent to 0.25 percent. In addition it plans to charge a negative interest rate of minus 0.25 percent when banks leave their money deposited with the Reichsbank. This is a slap in the face for the banks, writes the daily Sydsvenska Dagbladet: "The lowering of interest signals that the Reichsbank does not yet see the end the financial crisis. But the most important signal was the interest rate cut itself yesterday. The Reichsbank decided to reduce its own interest on savings to minus 0.25 percent. Now it costs the banks money to leave their money overnight with the Reichsbank. Roger Josefsson, chief economist of the Danske Bank, says that this approach is unique and that the message the negative interest rate sends is clear: 'The money should be released into the system'. The Reichsbank is implementing a constructive financial policy and the message sent yesterday was more than a wagging of the finger at the Swedish banking system. It was a kick in the shin."

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