When negative interest rates and helicopter money reach German savers

Justified by the achievement of its inflation target, the European Central Bank has introduced negative deposit interest rates for commercial banks.

If commercial banks were forced to pass on these negative interest rates, private bank customers could also be confronted with a negative return on their savings. Should the inflationary effect of the negative interest rates – along with further unconventional monetary policy measures – fail to materialise in the future, it cannot be ruled out that the ECB itself will use measures such as helicopter money. The results of our survey show that while negative interest rates are relatively inefficient in terms of generating consumer price inflation, they do provide relevant wealth distribution effects.

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