Sweden's Riksbank crosses the Rubicon

The deflationists must be in shock right now. The Sveriges Riksbank, the oldest central bank in the world, has rejected the very idea of sound money policy.
Today, Riksbank cut Sweden's deposit rate to -0.25%, effectively charging savers interest on deposited money.

Deposit Rate

The decision on the repo rate will apply with effect from Wednesday, 8 July. The deposit rate is at the same time cut to -0.25 per cent and the lending rate to 0.75 per cent.

Of course this will get instantly pushed through the entire banking system.

"It's a double whammy, or even a triple whammy," said Roger Josefsson at Danske Markets.

"The deposit rates are actually negative now. In some sense they are creating a money machine for banks. You can lend all you want, but don't put that back into the central bank."

This has all sorts of implications. For instance, just when consumers are trying to deleverage in order to weather the economic storm, they are being prevented from doing so. The economy of Sweden, like all 1st world nations, are overflowing with debt. Still, the authorities are determined to keep it from readjusting.
If this "works" in Sweden you can bet that you'll see it elsewhere.

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Ya know I saw that flying by and it didn't connect because it's not fathomable to have a negative interest rate on savings...
so I it didn't register.

Thanks for bringing this one to attention!

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Riksbank charging for deposits held

Naked Capitalism has a piece speculating as to why Sweden is doing this. But at the bottom is this:

Update 1300ET: Note – so as not to play too fast and lose with my terminology, I should clarify that the Riksbank is charging banks for holding deposits at the Riksbank. They are not lending at negative interest rates as the statement “Basically, you are giving people money to borrow” suggests. Also, regarding the lending by the Riksbank, they are not technically engaging in quantitative easing (buying government paper with new money). However, the net effect of the lending is to increase credit flow.

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