German retail bank announces negative interest rates

BitmoreCoin

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Quote from: Yeah? on November 03, 2014, 06:02:08 AM

Quote from: BitmoreCoin on November 03, 2014, 05:44:28 AM

This is good news to currency which you can keep it yourself, such as Bitcoin.

Well whilst negative interest is bad, bitcoin has been losing value all year and it down 50% of its worth, so not exactly great as a currency or store of wealth at the moment sadly.

Time will tell.

Yeah?

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Quote from: BitmoreCoin on November 03, 2014, 05:44:28 AM

This is good news to currency which you can keep it yourself, such as Bitcoin.

Well whilst negative interest is bad, bitcoin has been losing value all year and it down 50% of its worth, so not exactly great as a currency or store of wealth at the moment sadly.

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Quote from: adhitthana on November 01, 2014, 08:25:00 PM

A short time ago the ECB (European Central Bank) announced that banks who deposited money with them would get a negative interest rate, so I guess the banks are passing it along. Here is the earlier announcement from the ECB. http://www.ecb.europa.eu/home/html/faqinterestrates.en.html
The ECB have been pumping new fiat money into Europe but they don't want the banks to merely just deposit this money back into the ECB and earn interest. The ECB believe (or hope) they can revive the European economy if only the banks will lend money out to businesses.

Exactly! This is a response to what happened during the previous QEs in the US. Governments wants to inject money into the economy and lazy risk adverse banks would rather earn interest on their borrowed money.

BitmoreCoin

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This is good news to currency which you can keep it yourself, such as Bitcoin.

manselr

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I think it' also relevant to note that financial institutions are kinda flipped upside down in regards to their attitudes towards having money. Having money on hand is a burden for them. They'd much rather lend money out than take your deposits. The National Bank Transfer day orchestrated by some Occupy folks a few years back was idiotic. The credit unions were burdened by the extra deposits. And the banks were none the worse off for the loss of funds.

adhitthana

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Quote from: padrino on November 02, 2014, 01:58:27 PM

Quote from: adhitthana on November 01, 2014, 04:57:10 AM

Quote from: DeadCoin on November 01, 2014, 04:33:19 AM

You're joking, right? Bitcoin has lost 70% this year, and it has volatility up to 15% a day. How is that superior?

No. I don't think you understood what I wrote. I said it was a reason. I didn't say anyone should buy Bitcoin, or that it had been the best investment in recent months.
What I did say is that Bitcoin is superior over this kind of bank deposit in as much as you don't get penalised merely for storing it.

That's similar to me saying a car is a superior way to transport tons of cargo.
There are many ways that are better and more economical but apparently I am supposed to ignore all of the facts and look at one variable as a justification for my assertion... Fairly silly to even make the argument, don't you think...

Not a perfect analogy I'd say because we know what a car will be in 10 years time but we don't know what the Bitcoin economy will be like in as little as 6 months time.
In other words the Bitcoin economy has the potential to evolve and change quite a lot, whilst a car will always just be a car.

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Quote from: adhitthana on November 01, 2014, 04:57:10 AM

Quote from: DeadCoin on November 01, 2014, 04:33:19 AM

You're joking, right? Bitcoin has lost 70% this year, and it has volatility up to 15% a day. How is that superior?

No. I don't think you understood what I wrote. I said it was a reason. I didn't say anyone should buy Bitcoin, or that it had been the best investment in recent months.
What I did say is that Bitcoin is superior over this kind of bank deposit in as much as you don't get penalised merely for storing it.

That's similar to me saying a car is a superior way to transport tons of cargo.

There are many ways that are better and more economical but apparently I am supposed to ignore all of the facts and look at one variable as a justification for my assertion... Fairly silly to even make the argument, don't you think...

adhitthana

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Quote from: luckyluigi on November 01, 2014, 08:25:18 AM

That policy makes no sense to me. Someone explain why they would do this?

A short time ago the ECB (European Central Bank) announced that banks who deposited money with them would get a negative interest rate, so I guess the banks are passing it along. Here is the earlier announcement from the ECB. http://www.ecb.europa.eu/home/html/faqinterestrates.en.html
The ECB have been pumping new fiat money into Europe but they don't want the banks to merely just deposit this money back into the ECB and earn interest. The ECB believe (or hope) they can revive the European economy if only the banks will lend money out to businesses.

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Quote from: yayayo on November 01, 2014, 09:57:05 AM

I think it's not the only bank that has effectively a negative interest rate.

Many other banks don't pay any significant interest but have service fees that exceed any potential return on small - medium deposits. Explicitly implementing negative interest rates is a bad marketing decision by the bank. From a business perspective it's wiser to simply establish more hidden fees.

Of course the whole concept of interest is an idiotic one, that can only exist in our debt-based fiat money system.

ya.ya.yo!

Most banks will actually not pay any interest on even medium sized deposits (anything under a few thousand dollars) if you have an appropriate kind of account for your balance. These banks will also allow you to avoid paying fees by meeting certain criteria (for example using their bill pay service or using your debit card so many times per month, or by receiving your paycheck via direct deposit into your account)

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Quote from: adhitthana on October 31, 2014, 11:55:09 PM

Quote

Berlin (dpa) - A German retail bank announced Wednesday negative interest rates for big deposits, meaning it will charge 0.25 per cent to keep the customer‘s money if an account goes over 500,000 euros (635,000 dollars).

http://en.europeonline-magazine.eu/german-retail-bank-announces-negative-interest-rates_361835.html

Another reason why Bitcoin is a superior place to store wealth

That's just plain insane...

Quote from: DeadCoin on November 01, 2014, 04:33:19 AM

You're joking, right? Bitcoin has lost 70% this year, and it has volatility up to 15% a day. How is that superior?

Nope, it's actually up 62% (compared to 2 Nov 2013).

The superiority point isn't about current exchange rates. If you store 1 BTC in a secure wallet, you will have 1 BTC after 1,2,5 or whatever number of years + you know exactly what the supply inflation will be. With fiat, you can't be sure of anything, regulators can surprise you with things like negative interest etc.

yayayo

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I think it's not the only bank that has effectively a negative interest rate.

Many other banks don't pay any significant interest but have service fees that exceed any potential return on small - medium deposits. Explicitly implementing negative interest rates is a bad marketing decision by the bank. From a business perspective it's wiser to simply establish more hidden fees.

Of course the whole concept of interest is an idiotic one, that can only exist in our debt-based fiat money system.

ya.ya.yo!

Q7

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This is the first time that I have heard about negative interest rates. I would accept zero but no way it's going to the negative side. Even if you say you have to pay for employees, electricity, paper and other cost to maintain the transaction, i still can't figure out. If the money is lent to a business owner who can invest that would at least turn in positive figure. Unless the currency is already trash and the money can't even be used for anything.

Bit N Roll

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Quote from: nextblast on November 01, 2014, 12:37:14 AM

Soon this will affect all non-bitcoin users. Bitcoin is not fad. It is serious future. Cool

Ow... And what future is that?

luckyluigi

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That policy makes no sense to me. Someone explain why they would do this?

galbros

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Quote from: phillipsjk on November 01, 2014, 12:29:29 AM

The reason I was interested in trying such a thing was to prove my Economics Professor wrong when he said negative interest rates are essentially impossible. Little did I know, I simply had to wait~13 years for actual banks to do it.

Negative nominal interest rates should never happen. After all, you could just keep your money in your pocket or house. Plus people are generally assumed to prefer consumption today rather than tomorrow. It's interesting how this has not proved the case, first in Japan, where an aging population decided that the future was way more important than the present and now more broadly in Europe.

Good job trying to stick it to your economics professor though, those guys are often way too arrogant.

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Quote from: DeadCoin on November 01, 2014, 04:33:19 AM

Quote from: adhitthana on October 31, 2014, 11:55:09 PM

Quote

Berlin (dpa) - A German retail bank announced Wednesday negative interest rates for big deposits, meaning it will charge 0.25 per cent to keep the customer‘s money if an account goes over 500,000 euros (635,000 dollars).

http://en.europeonline-magazine.eu/german-retail-bank-announces-negative-interest-rates_361835.html

Another reason why Bitcoin is a superior place to store wealth

You're joking, right? Bitcoin has lost 70% this year, and it has volatility up to 15% a day. How is that superior?

You are joking right? You clearly don't understand the difference between the the fluctuating purchasing power of a good and actually losing the underlying as a cost of holding the underlying good.

adhitthana

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Quote from: Unbelive on November 01, 2014, 05:11:53 AM

Quote from: adhitthana on October 31, 2014, 11:55:09 PM

Quote

Berlin (dpa) - A German retail bank announced Wednesday negative interest rates for big deposits, meaning it will charge 0.25 per cent to keep the customer‘s money if an account goes over 500,000 euros (635,000 dollars).

http://en.europeonline-magazine.eu/german-retail-bank-announces-negative-interest-rates_361835.html

Another reason why Bitcoin is a superior place to store wealth

Banks need to keep your money safe. So is normal they want some fee for that. With Bitcoin you are the bank, so no need to pay yourself for that.

It's actually not normal with a fiat currency. It might be normal with say gold, but when banks have the ability to create credit out of nothing, then it is "normal" for them to pay interest on deposits.
What is not normal is when a central bank (in this case the ECB) charges banks to store (fiat) money in an attempt to stimulate business. And this was the precursor to this earlier in the year.

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Quote from: adhitthana on October 31, 2014, 11:55:09 PM

Quote

Berlin (dpa) - A German retail bank announced Wednesday negative interest rates for big deposits, meaning it will charge 0.25 per cent to keep the customer‘s money if an account goes over 500,000 euros (635,000 dollars).

http://en.europeonline-magazine.eu/german-retail-bank-announces-negative-interest-rates_361835.html

Another reason why Bitcoin is a superior place to store wealth

Banks need to keep your money safe. So is normal they want some fee for that. With Bitcoin you are the bank, so no need to pay yourself for that.

Soros Shorts

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Quote from: DeadCoin on November 01, 2014, 04:33:19 AM

Quote from: adhitthana on October 31, 2014, 11:55:09 PM

Quote

Berlin (dpa) - A German retail bank announced Wednesday negative interest rates for big deposits, meaning it will charge 0.25 per cent to keep the customer‘s money if an account goes over 500,000 euros (635,000 dollars).

http://en.europeonline-magazine.eu/german-retail-bank-announces-negative-interest-rates_361835.html

Another reason why Bitcoin is a superior place to store wealth

You're joking, right? Bitcoin has lost 70% this year, and it has volatility up to 15% a day. How is that superior?

"this year this"
"this year that"

Bitcoin is not for the ADD generation.

adhitthana

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Quote from: hua_hui on November 01, 2014, 04:28:28 AM

The problem is that the bitcoin price is too volatile and the conversion rate to fiat is decreasing so end up the total value of their bitcoin holding in terms of fiat is still losing. There is still no strong reason to incentivize ppl to hold bitcoin.

I'd agree, but Bitcoin is still very young. It does have this important advantage, though until regulatory issues become clear it will still be subject to the kind of volatility we see.

But, I'd also suggest that there are some broader deeper issues that come into view when banks both charge to hold a fiat currency and or confiscate deposits (as we saw in Cyprus).
Bitcoin does address some of these issues, even though it still has significant problems of it's own.

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