Negative Interest Rate Policy Experience of Central Banks in Advanced Country after the Global Crisis: An Evaluation

Short-term interest rates used as conventional policy tools were lowered to near zero by developed country’s central banks following the financial crisis of 2008. As a result, the possibility of using short-term interest rates as a policy tool disappeared. This situation gave central banks of developed countries more opportunity to adopt unconventional policy tools, and it can be observed that negative interest rate policy was finally included into this policy set. The purpose of negative interest rate policy is to increase the resources that will be used by the private sector by decreasing excessive reserves kept at central banks, thereby contributing to economic recovery. This paper deals with negative interest rate policy as a tool of unconventional monetary policy that central banks of some developed countries have adopted. In this way experiences of central banks which carry on negative interest rate policy were evaluated. Although it is hard to outline a definite judgement about this policy’s consequences considering the short period of time in practice it is important to appreciate unconventional and partly prevalent implementations in the sight of current monetary policy contest