Rogoff: Banks Make Money Off Low Rates in Long-Run

The video discusses the concept of negative interest rates, focusing on the zero bound and its implications for the banking sector. It highlights the long-term nature of implementing effective negative rates, considering legal and tax issues. The discussion includes the challenges faced by banks like Deutsche Bank and the theoretical perspectives of economists like Ken Rogoff. The feasibility of pushing negative rates further is questioned, with current obstacles and financial firm resistance noted. The overall message is that while negative rates are a long-term proposition, they require careful consideration and planning.

What is the main controversy discussed in relation to negative interest rates?

• The impact on small depositors

• The role of central banks

• The theoretical vs practical application in banking

• The effect on global trade

According to Ken Rogoff, what is necessary for the effective implementation of negative interest rates?

• Reduction in cash usage

• Immediate action by central banks

• Changes in tax laws and legal issues

• Increased interest rates for loans

What does Rogoff's plan exclude in terms of negative interest rates?

• Large corporate depositors

• Small depositors

• International banks

• Government bonds

What are some of the obstacles mentioned in pushing negative interest rates further?

• Societal and institutional challenges

• High inflation rates

• Lack of technology

• Political opposition

Why do financial firms push back against negative interest rates?

• They believe it will lead to economic growth

• They see it as a short-term solution

• They think it will increase their profits

• They consider it a disaster in the current context