Negative discount rate. Are negative deposit rates possible in Russia?

These are strange times for European borrowers. It’s as if they live in Through the Looking Glass, where all the rules of financial existence are turned inside out. How do you like a business loan at an interest rate of minus 0.1%? Yes, yes - banks now pay their borrowers extra for taking out loans. Of course, you have to pay additional fees, and they still make the loan traditionally paid. But the bank's remuneration now amounts to no more than a percent or two. The weirdness doesn't end there.

Investors provided Germany with about $4 billion of their funds. They provided it this week, knowing that not all the money would be returned - the same negative interest rates still rule the roost. And not only government bonds, but also the securities of individual corporations, the Swiss Nestlé, for example, became unprofitable for investors.

On the other side of zero

Of course, consumer and mortgage loans with negative rates is still a rare phenomenon, although some people are really lucky. While most banks are still considering their actions in the current circumstances, individual lenders have taken the actions of their central banks as a direct call. But depositors were much less fortunate - the negative rate turned out to be unprofitable for them, and now they have to pay the banks for using their deposits.

Negative interest rates in politics

Switzerland unpegged its franc from the euro, which sent markets into shock, while simultaneously cutting its key rate to negative. The Central Bank of Denmark reduced the rate as many as 4 times and in just a month. Now in this country the main rate is -0.75%. Sweden followed suit. And what’s going on in European securities markets is a topic worthy of economic research.

Back to consumers

Of course, all these incidents have not yet become widespread, and therefore depositors can still transfer their money to other banks. And bonds of emerging markets can still be an excellent alternative to European bonds.

In Russia the fall interest rates There is no forecast for loans yet. Therefore, businessmen also have to include the costs of servicing bank loans as other expenses. However, despite the rise in prices, business loans have not become more accessible - banks are still very demanding of entrepreneurs. But still

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Western economy in beginning of XXI century faced a new phenomenon - negative interest rates on bank transactions. This phenomenon is still poorly understood; the attention of financiers and economists is focused only on its short-term consequences. Meanwhile, negative interest rates on active (credit) and passive (deposit) operations of a number of banks Western countries difficult to consider as a random phenomenon. This, in our opinion, is a long-term trend, indicating that the model of capitalism that has existed for several centuries is becoming obsolete. And something else is replacing it.

Let me remind readers that in the theory and practice of banking two concepts are used - nominal and real interest rates. The first (nominal) is the level of interest that is officially recorded by the bank and appears in documents on credit and deposit transactions. The second (real) is the nominal rate, adjusted taking into account the current macroeconomic and market situation. First of all, price changes (inflation, deflation) are taken into account; if necessary, changes in the exchange rate of the monetary unit used to determine interest can also be taken into account. The real interest rate of banks on both active and passive operations could go into the negative in the last century, and even in the century before last. But this, as they say, was considered an extraordinary event, “force majeure.” For capitalism, this was a deviation from the norm. There was no talk about negative nominal interest rates.

But at the beginning of the 21st century, nominal interest rates also began to go negative. True, so far only for passive (deposit) operations. And there is no need to talk about negative real interest rates for both passive and active operations. Banks and their clients began to face this constantly. Negative interest rates were first introduced by the Swedish Central Bank after the 2008 crisis. The Swedish Central Bank established a fee for commercial banks for placing funds in correspondent accounts in amounts that exceeded required reserves. The motive for this policy was to force banks to lend to the real sector of the economy and to make it inconvenient for banks to store non-performing funds. In 2012, the Danish Central Bank also risked going into negative territory.

When the debt crisis began in the European Union, which provoked a weakening of the euro, banks, companies and individuals EU member countries and especially the eurozone began to look for financial instruments denominated in more stable currencies than the euro. Swiss bank deposits in Swiss francs turned out to be especially attractive. The powerful influx of funds into the Swiss banking system (by the way, not only from the EU, but also from other countries) created problems. Firstly, for credit institutions in Switzerland (where to find profitable markets and instruments for active operations?). Secondly, for the entire Swiss economy (an excessive increase in the exchange rate of the Swiss franc began). Swiss banks decided to protect themselves from an excessive influx of money from troubled foreign markets by introducing negative interest rates on deposits. This happened in 2012. And in December 2014, the Swiss National Bank (SNB) also introduced a negative interest rate on deposits (0.25%). He motivated his decision by the fact that this measure would prevent further excessive strengthening of the national currency, and would also create incentives for investment in the Swiss economy.

The actions of the Central Banks of Sweden and Denmark were closely followed not only by the Central Banks of other EU countries, reflecting on the possibility of using similar means monetary and economic policy at home, but also European central bank. In 2013-2014 he has already set interest rates on deposits at zero. Last summer, he lowered the rate below zero for the first time; in the fall it was at minus 0.2%. In addition, in February the ECB announced that it was launching a quantitative easing program similar to the American one. In fact, this means that the European “printing press” will work at full capacity. Even 20-30 years ago, any economist would have said that, according to the canons of financial science, this should lead to inflation or even hyperinflation. However, Europe fears the opposite phenomenon - deflation. How does this compare with traditional economic dogma? - Very simple.

The products of the “printing press” do not end up on commodity markets, but go either to financial markets (creating “bubbles” there) or get stuck in the banking system in the form of deposits. The swelling of deposits, in turn, lowers the value of money. Real interest rates on loans are going negative. Moreover, negative interest rates in the banking system have a downward impact on the yield of securities traded on the stock market. Many securities have negative yields. About a quarter of government bonds in the eurozone now have negative yields, according to JPMorgan Chase. Over the past two years, European governments including Austria, Finland, Germany and Sweden have issued government bonds with negative nominal yields. Taking this into account, it becomes clear that against the background of European securities, US Treasury bonds with their, as they say, “symbolic interest” look very attractive.

Federal backup system(Fed) The United States, with its “quantitative easing” policy, also brought many American banks to the point that they were in the red for both deposit and lending operations. If American banks earn billions, it is not from traditional deposit and credit operations, but from investments, and, in fact, speculation. Many of them are de facto investment banks.

Classical capitalism is characterized by the so-called overproduction of goods (K. Marx wrote about this in Capital). For capitalism of the 21st century (at least for Western countries), the main thing has become the so-called overproduction of money. If with the “overproduction of goods” there is a fall in the prices of goods, then with the “production of money” there is a fall in the prices of money.

Interest rates going negative is a manifestation of this fall in money prices. If money “worked”, i.e. fulfilled its function as a medium of exchange, there would be no negative interest rates and no constant threat of deflation. Money turned into a “treasure” (the function of money as a means of accumulation) and ceased to serve the real economy and the vital needs of society. One cannot but agree with those authors who call this phenomenon the “death of money.” The “dead man” begins to cool down; a decrease in its temperature is manifested by a decrease in interest rates and their departure into the minus zone.

Some economists believe that money and capitalism are still alive, but are indeed in a very critical phase. Various means of their resuscitation are proposed. In the United States, there are calls for the Federal Reserve to establish negative interest rates on deposits, as did the central banks of Sweden, Denmark, Switzerland and the ECB. Some people think that it is enough to limit ourselves to the fact that only real interest rates are in the red, and for this it is necessary to main goal monetary policy to stimulate inflation. How funny it is to hear this against the backdrop of constant statements by the Central Bank of Russia that its main task is to “fight inflation”!

Here's a "recipe" for reviving the American economy from Goldman Sachs chief economist Jan Hatzius. Since the regulator does not have the ability to reduce the nominal rate below 0%, it proposes to increase inflation to 6%. How? - Through aggressive quantitative easing (QE), in other words, through the issuance of new unsecured dollars. In other words, he is against curtailing the COP program, but is in favor of its continuation and expansion. At the current nominal level of the federal funds rate (0-0.25%), the real key rate will be equal to minus 6%. This, according to Jan Hatzius, is the minimum value of money that will allow the American economy to be revived. A paradoxical situation arises: the chief economist of a leading Wall Street bank proposes to bring a patient out of a coma using means that are a negation of capitalism.

The American and world media write quite a lot about the fact that at the beginning of this year the CS program in the USA will be completely curtailed. Allegedly due to the fact that its goals have been achieved, the macroeconomic situation in the country has stabilized, unemployment has been reduced to a safe level. But this is conscious or unconscious misinformation. As the situation at the beginning of 2015 shows, the operation of the printing press practically did not produce any visible results: lending volumes did not increase, and the savings rate continued to grow. Thus, we have to admit that even with a strong desire, today the Federal Reserve System has extremely little influence on the level of inflation and the general economic situation in the country. If we draw an analogy with the cold body of a patient in the intensive care unit, then Jan Hatzius’s recommendation (to further “promote” the CS program) is reminiscent of the proposal to fight for the patient’s life with the help of a heating pad, which should stop the decrease in body temperature.

Another representative of the financial world is more radical in his recipes - former economist of the European Bank for Reconstruction and Development (EBRD) Willem Boiter. He proposes to act straightforwardly, discarding complex and unrealistic methods of “treatment” through inflation and traditional instruments monetary policy. The state simply needs to decree the establishment of negative nominal interest rates in the banking system - both at the level of central banks and commercial banks, both for passive and active operations. The idea is downright revolutionary. But we need to save capitalism!

True, if the “patient” can be returned from the other world, then it will be a different person. If Western society switches to such an economic model, then it will no longer be capitalism, but something else. A century and a half ago, the classic of Marxism wrote in Capital that the rate of profit under capitalism would steadily decline; he even elevated this provision to the rank of law. Consequently, the profit of money capitalists in the form of interest will also decrease. Thus, on a “scientific basis,” Karl Marx predicted the death of capitalism, which, as he promised, would be replaced by socialism. Regarding the death of the classical model of capitalism, I agree with the “classic”. But there are strong doubts about the automatic arrival of socialism.

The current “masters of money,” by which I mean, first of all, the main shareholders of a private corporation called the Federal Reserve, are beginning the planned dismantling of the previous model of capitalism and its planned replacement with another socio-economic model. I would venture to call this alternative model “new slavery.” Some visionary politicians, writers and economists have already speculated about this possible metamorphosis in the last century. Banks will transform from traditional depository and credit institutions into “control and accounting” centers. But not financial flows and financial assets, but labor and production. Or rather, control of a person’s behavior and thoughts. The world will be structured according to the principle of one big barracks, in which the role of money in its traditional sense will be reduced to a minimum.

The famous German socialist and financier Rudolf Hilferding (author widely) wrote about such a post-capitalist model of society at the beginning of the last century. famous book"Financial capital"). He called such a society “organized capitalism,” which, in his opinion, would already have signs of socialism (in particular, the spontaneous nature of economic development would disappear). Bankers, in his opinion, are the main driving force of modern history; they ensure the evolutionary transition from “wild” capitalism to socialism through the stage of “organized capitalism.” Hilferding's socialist ideal is a totalitarian society ruled by bankers. It was Hilferding who coined the term “totalitarianism,” but gave it a positive meaning. Already after Hilferding, some bright details Such a post-capitalist society was completed by such writers and futurists as George Orwell (Animal Farm, 1984) and Aldous Huxley (Brave New World).

Russians who complain about high mortgage rates can only envy Europeans, some of whom banks pay extra “in gratitude” for the loan they took out. The first bank to switch to negative lending rates was Nordea Bank. This happened in Denmark at the beginning of last year. Since then, at least two other banks in Belgium - BNP Paribas and ING - have paid extra to their clients. In particular, this was recently reported by Het Neuwsblad. The banks in question argued that the negative rates only affected a “limited number of contracts.”

These situations arise for loans with a floating interest rate (these are mainly mortgage loans), depending on key and interbank rates, explains Natalya Pavlunina, head of the retail products department of the retail business department of Loko-Bank.

When, for example, the key rate reaches negative values, the interest rate on the loan also becomes negative. The current values ​​of the European interbank offered rate Euribor and a number of others have become negative and, depending on the period, range from -0.348% per month to -0.012% per year, notes Konstantin Petrov, CEO of VTB Registrar JSC. Accordingly, if a number of banks in their loan agreements have tied client rates to Euribor, then it turns out that it is no longer the client to the bank, but the bank that must pay the client for giving him a loan.

Negative rates on the interbank market and the entire phenomenon of negative rates in general are a consequence of the ultra-soft monetary policy pursued by the European Central Bank (as well as the central banks of other developed countries). “The central banks of most developed countries have been pursuing expansionary monetary policies over the past five years, reducing lending rates to a minimum and introducing negative rates. The European Central Bank and the Bank of Japan are trying to stimulate the economy with negative rates. Central banks of European countries (Switzerland, Sweden, Denmark) use negative deposit rates to reduce capital inflows and adjust the exchange rate of national currencies against the euro,” notes Dmitry Monastyrshin, chief analyst of the analytical department of Promsvyazbank.

The European Central Bank has undertaken new round weakening its policies at a meeting on March 10 this year. He lowered the key rate from 0.05% to zero, and the deposit rate was lowered from -0.3 to -0.4%. In addition, the volume of asset repurchases from the market was expanded from €60 billion to €80 billion per month. The de facto head of Mario Draghi did not rule out introducing a negative key rate. "Looking ahead, taking into account the current outlook for price stability, the Governing Council expects the ECB's key interest rates to remain at current or lower levels for an extended period of time," he said.

A negative rate (on deposits) should ideally encourage commercial banks to lend more, rather than hoard money in accounts with the Central Bank. The population, for whom the return on deposits is decreasing, must spend more, which, coupled with the emission pumping, should accelerate inflation to the target 2% and increase the income of the corporate sector.

In practice, things don't work out so smoothly. The population does not spend, but saves, but increasingly prefers to keep money in demand accounts (this requires banks to have a large amount of liquidity, which is unprofitable) or even keeps it at home in the form of cash. Inflation is not growing (deflation has already been recorded in the eurozone several times this year), as cheap energy resources are pulling consumer prices down.
Analysts at Bank of America believe that “so far, negative interest rates have failed to raise inflation expectations in the eurozone, Switzerland and Japan, and have shown only marginal effectiveness in this regard in Sweden.”

Alan Greenspan, the former head of the Federal Reserve, noted in one of his interviews with Bloomberg that negative rates lead to a reduction in capital expenditures, and low investment does not allow increasing labor productivity. The result is low economic growth rates. Banks are forced to invest money in highly liquid government bonds, but their yield is often also negative. German magazine Der Spiegel provides such data. There are currently €2.6 trillion worth of negative-yielding bonds traded in the eurozone. When purchasing seven-year German government bonds, an investor will lose €2 per thousand every year. It turns out to be a vicious circle that only leads to a drop in income in the banking system.

Dangerous experiment

Analysts at the American bank Morgan Stanley called the ECB's negative rates a “dangerous experiment.” “We believe that the potential decline in banking profitability due to low benchmark and negative deposit rates will be a major risk factor for European banks in 2016,” Morgan Stanley said. Russian analysts also do not see anything good in negative rates. Konstantin Petrov believes that the current financial policy artificial economic stimulation through ultra-low rates and an increase in the money supply in the context of a decrease in real production does not lead to inflation, but to deflation and the continuation of speculative growth in stock markets, where excess liquidity is concentrated. This may negatively affect the stability of banks and, instead of stimulating economic growth, lead only to prolonged stagnation. “As a result, this could lead to big problems in the financial infrastructure and another round of the financial crisis,” he believes.
Andrey Shenk, an analyst at Alfa Capital Management Company, believes that stories with negative client rates are one-time anomalies and such loans will not be carried out on a mass scale, so these particular cases do not pose a threat to the banking system. But globally negative rates create certain risks, including forcing banks to adjust their approach to risk management, increasing exposure to risk in order to compensate for the decrease in income from falling rates and to place excess liquidity, he notes.

“As a result of this, bubbles may inflate in the markets, which will ultimately at least complicate the process of normalizing monetary policy, and in a bad scenario may provoke new waves of crisis,” Andrei Shenk fears.

At the same time, analysts believe that banks will not put up with negative rates. “It is unlikely that banks will allow this phenomenon to become mass character“- believes Konstantin Petrov. Dmitry Monastyrshin draws attention to the fact that since banks in developed countries have the opportunity to attract funds from clients and regulators at negative rates, banks manage to maintain margins on client contracts, even if the rate on them goes negative. It is worth noting that even with negative loan rates, the client will most likely have to pay the bank a small amount in addition to the principal debt due to the presence of service fees. “However, the situation when the lender pays the borrowers is inherently absurd and bankers in the relevant countries are already taking measures to protect their capital,” notes Natalya Pavlunina. According to her, a number of European banks have already supplemented their mortgage lending conditions, fixing the minimum possible value of the loan rate, and also turned to regulators for clarification and the possibility of changing legislation. The only question that has no answer yet is how it will exist financial system, if the ECB and other regulators continue to ease their monetary policy and inflation and the economy do not recover.

The head of the world's largest investment firm, BlackRock, called for attention to the dangers of cutting interest rates, which often turn negative, a policy that some central banks have resorted to to support the economic situation. Larry Fink, co-owner and chief executive officer of BlackRock, noted in his annual address to shareholders that low interest rates are also hurting savers, which in turn could mean the policy is having the opposite effect on the economy than expected.

He sees negative interest rates as "particularly worrying" and potentially counterproductive amid social and political risks. This has created the most volatile situation in the global economy in about the last 10 years, MarketWatch reports. “Their actions [central banks] are putting severe pressure on global savings and creating incentives for them to seek high yields, pushing investors towards less liquid assets and increased level risk, which has potentially damaging financial and economic consequences,” Fink wrote to shareholders.

Investors are forced to send more money into investments to meet their retirement goals, which means they will spend less to meet their own consumer spending. These and a number of other factors, including geopolitical instability, are creating “a high degree of uncertainty in the global economy not seen since before the crisis.” . “Monetary policy is designed to support economic growth, but now, in fact, it causes risks of reducing consumer spending,” the German financier concluded.

The IMF is in favor, but...

Meanwhile, the International Monetary Fund also shared its own thoughts on negative interest rates. Its experts said that “in general they help provide additional monetary stimulus and financial conditions, which support demand and price stability.” The IMF believes these rates could encourage the private sector to spend more, although it acknowledges that savers could be hit.

The IMF does acknowledge that there is a "limit to how far and how long" negative interest rates can go. Such a policy could cause “unpredictable consequences”: for example, banks will begin to lend to risky borrowers in an attempt to compensate for the decline in the number of depositors. Negative interest rates can also trigger boom-bust cycles in asset prices, the IMF notes.

Extraordinary measure

The logic behind introducing negative rates is very simple, says Robert Novak, senior analyst at MFX Broker. In conditions when the rates at which commercial banks can place money on deposit with the Central Bank are positive, and the economic prospects are uncertain, banks often prefer not to lend to households and businesses, but to earn money without risk by simply placing money with the Central Bank.

When rates become negative, it becomes unprofitable to keep money in the Central Bank: in order to earn money, banks are forced to engage in active lending - it is better to lend money even at minimum percentage and get at least some income rather than obviously lose when placing them on a deposit with a negative rate. Thus, by introducing negative rates, regulators are trying to force banks to lend more actively, and to issue loans at a minimum interest rate. In the future, this policy of “cheap loans” should have a stimulating effect on the economy.

Yes, says Robert Novak, Lawrence Fink's comments about the possible negative consequences of negative interest rates are correct. But these negative consequences are unlikely to materialize if the period of negative rates is short-lived. Still, the world's central banks consider this measure as extraordinary and do not intend to delay its application. So this policy is unlikely to lead to any serious problems.

The new chapter of the world economy

Zero or negative rates are the same as the new head of the world economy, says Alor Broker analyst Alexey Antonov. After the 2008 crisis, the United States and the eurozone did this in order to stimulate economic recovery, but they did not think about the consequences and the proper effectiveness. And, as we have seen from history, it was in vain - because the expected result did not happen. While the US is gradually recovering, growth in the eurozone is almost zero.

Over long periods, the model is disastrous for developed economies, and it seems, the expert says, that the American regulator understands this after all, since it is already thinking about raising the rate. Now they are faced with a serious question - to raise the rate, despite the global risks from China and cheap oil, or to balance at the current zero rates and wait for economic growth, and only then raise it.

Objectively, Antonov believes, now the Fed has no effective measures left to maintain the economic balance, and, perhaps, in the event of a crisis, the story of launching the printing press may repeat itself. That is, in other words, it is less stressful for the economy not to raise the rate, but this will only have an effect for some time, until the next time the machine is connected to the business - this will not solve the global problem. An increase in it, which after a while would somewhat sober up the economy, would solve the problem. But here again the question, says the expert, is whose interests does the government adhere to? Objectively, he now needs public peace and business support, so, probably, the saga with retention will continue.

We're not going there

As for the Russian Federation, then, of course, the introduction of negative rates by the Bank of Russia is out of the question, Robert Novak is sure. This measure is introduced by central banks only when there is a real threat of deflation that cannot be prevented by any other measures. In Russia, on the contrary, there is inflation that is almost twice the target level of 4%. In such cases, in world practice it is not negative ones that are used, but, on the contrary, increased rates. Which, in fact, is what the Bank of Russia did.

Nevertheless, according to Robert Novak, Russia can derive some benefit from the negative interest rates involved in Europe and Japan. Rates on Russian bonds (both government and corporate) look very attractive, and, as Bloomberg reported yesterday, Western hedge funds are showing increasing interest in ruble assets. So, all other things being equal, the regime of negative rates in the leading economies of the world will contribute to the influx of capital into the Russian Federation.

With regard to Russian realities, Alexey Antonov agrees, everything is somewhat different here. Our economy is heavily dependent on the commodity sector, so any fluctuations in the oil market have a serious impact on domestic policy Central Bank. In a situation where oil dropped significantly and the currency soared to unprecedented heights, the Central Bank was forced to sharply increase the rate, otherwise the economy would have collapsed. Currently, the Central Bank adheres to the policy of fighting inflation, which is why the rate has remained at the same level.

However, how long will he stick to it, the expert wonders, complex issue, after all high rate one way or another affects the development of such an important sector of the economy as small and medium-sized businesses. A slight reduction in it at the next meeting of the Central Bank would have a positive effect on improving the economy, but, believes Alexey Antonov, it could hit the pockets of Russians.

It should be noted, however, that maintaining the rate of the Central Bank of the Russian Federation at the current level, despite the fact that economies everywhere are stimulated to grow by low rates, even minus, is also a dangerous practice. It is obvious that there is no other recipe for growth other than cheap money in the world economy today, and neither does our Central Bank. That’s why they hardly talk about growth there, preferring other goals and terms. However, despite the interest in Russia on the part of Western speculators, which does not bring us much benefit, although it feeds the money market (which then turns into a withdrawal of capital), these goals are hardly the optimal strategy. We have been told for many years that low inflation will lead to economic growth and real investment, but it is obvious that its decline does not correlate with economic growth in any way, rather the opposite.

Maybe we should stop being afraid of taking money out of citizens’ pockets - which is how high inflation is usually reproached - and just put it there, making it more accessible? But this is a completely different logic. As for the phenomenon of negative interest rates, of course, it requires observation and study; there is not much material on this new practice yet.

The phenomenon of negative interest rates - modern trend, which began in 2008. As a result of the financial crisis that broke out in the United States, the growth rate of leading economies slowed down, unemployment rose, and consumption declined. Central banks were forced to reduce interest rates in order to minimize the negative impact of these trends on the population and business. As a result, the discount rates of the leading central banks were reduced to record lows:

The credit resource became more accessible, however, the policy of “cheap money” did not have the desired impact on macroeconomic statistics. This was largely due to the fact that the presenters. The United States was the quickest to realize this fact and responded to it - in 2008, an economic stimulation program was launched, called “quantitative easing” or QE.

The efficiency of decision-making predetermined the vector further development events. Key US macroeconomic indicators have recovered to pre-crisis levels over several years, while their European counterparts remain less attractive even 6 years after the start of the crisis. A striking example— unemployment (moments of the launch and completion of the US economic stimulus program are highlighted):

Despite low rates, the problem of European economic recovery remained, and when the threat of deflation was added to it, . The regulator carried out regular verbal interventions; in September 2014, a negative deposit rate was introduced, and in 2015, a rate similar to the American QE.

Negative rates in the Eurozone

The ECB's negative deposit rate does not have a direct impact on household savings in commercial banks, since it only applies to certain commercial bank accounts with the Central Bank. The key goal of introducing this measure is to restore the lost rates of economic growth and return inflation to the target level of 2%. With the help of an ultra-soft monetary policy, the Central Bank seeks to increase the rate of lending to the population. Currently, the level of household spending in the Eurozone is below pre-crisis levels:

“Cheap money” should stimulate consumption; if this indicator grows, retail sales will increase, and businesses will be more willing to expand and, as a result, create new jobs. In addition, negative ECB deposit rates should encourage banks to increase the pace of lending to the real sector of the economy.

Negative yield?

The discount rate of the Central Bank of Switzerland and Denmark is at minus 0.75%, in Sweden – minus 0.1%. The logic of the central banks of these countries is similar to the logic of the ECB. At the same time, despite the fact that deposit rates for the population are not negative, the yield of individual debt securities was already negative. A similar situation was observed in the market for government debt securities in Denmark, Sweden, Switzerland and Germany and was caused by increased demand.

This demand can be divided into speculative purchases in anticipation of the full implementation of the QE program; acquisitions by banks, which, in the context of negative ECB rates, consider it more rational to place reserves in high-quality debt securities; purchases of large institutional participants using a passive asset management strategy (for example, pension funds).

As the QE program increases, the ECB will buy more and more European debt securities, as a result of which both the yield on bonds of problem countries and the yield on debt securities of economies that are quite solvent will decrease. QE was launched relatively recently, and I think that in the future we can expect a continuation of the downward trend in the yields of European government and corporate debt securities.

A decrease in profitability, coupled with low lending rates, will most likely contribute to a shift in the interest of certain groups of investors and an increase in the volume of investments in the European stock market. Leading European stock indices have remained attractive since the announcement of the European QE program in October 2014 and are likely to remain so for a long time to come.

The EURUSD pair is declining due to sustainable combination ultra-loose monetary policy of the ECB and expectations of an upcoming rate hike by the US Federal Reserve. Long-term trend, the immediate goal is parity.

The effectiveness of negative rates

It will be extremely difficult to assess the impact of negative rates on the economy separately from other methods of stimulation, since this is a set of measures that are applied simultaneously and have a cumulative impact on macroeconomic statistics; in addition, the effect of their implementation will most likely appear with a significant time lag.

The growing popularity of ultra-loose monetary policy among leading central banks provokes a depreciation of the national currencies of countries involved in such a currency race. Business conditions are becoming increasingly attractive for exporters, while importers suffer as foreign goods become more expensive due to exchange rate differences.

The ultra-soft policies of individual countries lead to suppression of the exports of their trading partners if they do not take similar measures and the exchange rate of their national currency does not decline. In other words, the introduction of aggressive measures to stimulate the economy by the central banks of leading economies may provoke a deterioration in the macroeconomic indicators of their trading partners and, as a result, contribute to the introduction of similar monetary policies by the latter.

According to statistics, the EU's key importers are China (16.6%), Russia (12.3%), the USA (11.7%) and Switzerland (5.6%). The fall of the euro will primarily affect the volume of imports from China, the USA, and Switzerland, since the national currencies of these countries are strengthening or do not show a decline comparable to that observed in the European currency market. In my opinion, the era of negative rates will last at least 1.5 years, and the key indicator of its end is the state of the Eurozone economy.

More detailed information about the reasons for the decline of the EURUSD pair and the prospects for the US and EU economies and in the form.