Friday, February 27, 2015

Monetary Spending and Negative Interest Rates in the Eurozone

This is a fascinating NYTimes article on the negative interest and bond rates that have now hit the European Union.  That means that people are making money for taking out loans while those parking their cash in banks are being charged for the right to do so!

If you want some help in explaining it all to your students above is a video from Education Portal on fiscal and monetary policy and here is another one that adds in the impact of those two policies on foreign exchange rates. If you prefer, here is a written article explaining the background.

Terms that you cover in your class that are in the article are: monetary policy, pegging a currency, interest rates, bonds, bonds, exchange rates and yields.

While we are at it, here is an article (2.28) stating that China's central bank just cut its interest rates in a bid to spur its slowing economy.  (updated 2.28)

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