What is NIRP?
Negative interest rate policy is an unconventional monetary policy tool used by central banks in tough economic times to stimulate the economy. Central banks may turn to NIRP to stimulate the economy even further if ZIRP or the zero-interest policy did not work in an effective manner. A lack of growth calls for more stimulation and economists and central banks may prescribe a dose of NIRP to revitalize the economy. In a negative interest rate environment, the lender would receive less capital from the borrower. A recent post by the IMF states that in a proposed cashless system where depositors…
