QuickTake: Central Banks at Less Than Zero

The video discusses the adoption of negative interest rates by central banks in Europe and Japan as a strategy to stimulate their economies. It highlights the Bank of Japan's recent move to adopt negative rates, following the European Central Bank and others. The video explains the potential benefits of negative rates, such as encouraging banks to lend more, but also warns of the risks, including market distortions and reduced bank profits. The discussion includes the impact on financial markets, particularly fixed income, and the broader economic implications, such as preventing deflation and potential currency issues.

In what ways might negative interest rates distort financial markets?

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What is the ultimate goal of policymakers in Europe and Japan when implementing negative interest rates?

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