Can you imagine a situation of sellers paying buyers?
Can you think of paying interest for the deposit you are making in the bank?
On 20th April 2020, bench mark rates of crude oil in US fell close to negative $ 40 per barrel. Meaning if you buy 100 barrels, you would get paid $4000 along with delivery of 100 barrels of crude oil.
Although negative crude price was a temporary phenomenon, Negative interest rates seem to have become common with several central bank interest rates. As of 1 April 2020, five central banks namely Japan, Sweden, Switzerland, European central bank, and Denmark have negative interest rates. It is estimated more than $16 Trillion Global Debt has negative yields. US central bank is also appearing to shortly get into that category.
Covid pandemic might make matters more worse, with governments needing to announce several huge stimulus measures to help revive the struggling economy. It will be interesting to see the economic impact in future with more debt with negative interest rates
Nityanand Jha, Assistant Professor, Unitedworld School of Law (UWSL)
Disclaimer: The opinions / views expressed in this article are solely of the author in his / her individual capacity. They do not purport to reflect the opinions and/or views of the College and/or University or its members.