Is S'pore ready to go cashless with NIRP?
Advances in cashless payment technology here have expanded the space in which interest rates can be reduced without causing disruptions in consumer banking.
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ON MARCH 10, the European Central Bank (ECB) cut its interest rate further to -0.40 per cent. Earlier this year, on Jan 29, the Bank of Japan (BOJ) stunned markets with a surprise move to negative interest rates. So far, five central banks have adopted the negative interest rate policy (NIRP): the BOJ, ECB, Swiss National Bank (SNB), Danmarks Nationalbank (DN), and Sweden's Sveriges Riksbank (SR).
Therefore, zero does not seem to be a lower bound for central banks' policy rates. However, a recent study by the Bank for International Settlements (BIS) noted that there would be "great uncertainty about the behaviour of individuals and institutions if rates were to decline further into negative territory or remain negative for a prolonged period".
Why negative interest rates?
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