Negative interest rates, a poison for financial institutions
Tuesday, 06 21 2016, Category: Financial, Country: World
Negative interest rates are a "seeping poison" for the business models of many of the world's most important financial institutions, and could affect their long-term "viability," according to new research from analysts at Citi.
In a new note from Citi Research, analysts Willem Buiter and Ebrahim Rahbari argue that institutions across the insurance, pensions, and banking sector are being threatened by the persistently low and negative rates.
Citing the words of Felix Hufeld, the boss of the Federal Financial Supervisory Authority, Germany's equivalent of the UK's Financial Conduct Authority, Citi argues that the "seeping poison" could mean that many institutions, especially money market funds - funds comprised of safe, short-term debts often used by retail investors as a way of making money on a very safe investment - are no longer viable in the long term.
Source: Business Insider