The nominal Interest rates - and not only real - can be negative very well.

Historical examples

Two cases are well-known:

• in 1979, the Taux at the day-the-day of the Swiss Money market, which were already close to zero, became negative during several days following a massive intervention of the Swiss national Bank on the foreign exchange market to stop the appreciation of the Swiss franc;
• on the market of the Repo, i.e. the money market guaranteed by titles, many transferable securities are treated or were treated, for very long periods sometimes, with negative interest rates, being able to go until several hundreds of basic points.

In the first case, it is the mechanism of the swaps of exchange which was the specific cause of imbalance. In the second, it is a question of the regulatory obligation of delivering titles.

Elementary theoretical justification

The traditional opinion according to which, to escape negative interest rates, it would be enough to thésauriser of the species, is in fact false. The Thésaurisation has a cost: the species can be flights, disappear in a fire, a flood, etc This cost, forgettable for the small amounts in cash, is certainly not it for important sums: it is that of the Assurance and thus of the amount of the premium of x% per annum which an insurer will require to guarantee the possible replacement of cash. Interest rates can thus be, even in a situation of balance, negative jusquà this x%.

Lastly, let us not forget that the banking trade must, with the Moyen-âge, its origin with the insecurity of the Thésaurisation and the Transport of species.