Bankers watch as Sweden goes negative - #economy #deflation


	Bankers watch as Sweden goes negative - #economy #deflation

JICWyllie

8-28-2009 1:14 PM

43 views

tags:

1-policy, 2-change, 3-reported, 4-sweden

JICWyllie says:

If banks are penalised for not lending, then imagine all the dodgy ventures they would get mixed up with.

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/10f7c4b2-f643-4633-a37e-e0847574b63b/381A6BD6-4355-4CFC-8E84-EB0F3E36B5F5/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://www.ft.com/cms/s/0/5d3f0692-9334-11de-b146-00144feabdc0.html" href="http://www.ft.com/cms/s/0/5d3f0692-9334-11de-b146-00144feabdc0.html" style="font-size: 11px;">www.ft.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/5d3f0692-9334-11de-b146-00144feabdc0.html"><P>For a world first, the announcement came with remarkably little fanfare.</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/5d3f0692-9334-11de-b146-00144feabdc0.html"><P>But last month, the Swedish Riksbank entered uncharted territory when it became the world’s first central bank to introduce <A href="http://swea.riksbank.se/sweavr/enkelResultat.do;jsessionid=AAL+kCfK4UVdQAoY73yiQw" title="Sveriges Riksbank" class="bodystrong">negative interest rates on bank deposits</A>.</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/5d3f0692-9334-11de-b146-00144feabdc0.html">Mervyn King, the Bank of England governor, has hinted he may follow the Swedish example as the danger of <A href="http://www.ft.com/cms/s/0/a9042452-1a3c-11de-9f91-0000779fd2ac.html" title="Financial Times / Samuel Brittan: Why UK should not fret about national debt" class="bodystrong">a so-called liquidity trap</A>, where cash remains stuck in the banking system and does not filter out to the wider economy, is an increasing concern for the UK.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/5d3f0692-9334-11de-b146-00144feabdc0.html"><P>“The success of the UK’s quantitative easing experiment hinges a lot on <A href="http://www.ft.com/cms/s/0/789dc252-9154-11de-879d-00144feabdc0.html" title="Financial times - Lending to business continues to fall" class="bodystrong">whether the banks will use the extra money </A>they are getting for lending to individuals and businesses.</P><P>“If there is no sign of this over the next few months, then the Bank of England might consider a negative interest rate. In essence, it is a fine on banks that refuse to lend.”</P></blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/381A6BD6-4355-4CFC-8E84-EB0F3E36B5F5/blog/" title="blog or email this clip"><img src="http://content9.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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