In Europe and Asia, negative interest rates are quite common, and have been embraced by a wide array of central banks, including the Swiss National Bank (SNB) in Switzerland.
Since January 2015, the SNB has charged a 0.75 percent fee on large deposits at the central bank. The goal is to devalue the Swiss franc, one of the strongest currencies in the world today.
As a result, Swiss banks have forked over $1 billion in subzero interest rate charges in the first half of 2017, up 40 percent year-on-year as customers are still hoarding cash, according to Reuters.
“It’s interesting to compare right after the crisis in 2008, cash levels were at 34 percent, and the low we have experienced in 2007, pre-crisis. There the cash was around 16 percent,” Julius Baer Chief Financial Officer Dieter Enkelmann said last week. “So there would be still room to go down if the markets would continue to do well.”
Despite a thriving stock market, the rich are the ones boosting their cash holdings. It is estimated that the banks’ most affluent clients are holding between 20 and 30 percent of their wealth in cash.
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