Many argue that borrowing for free and negative rates for savings mean an upside-down world for savers and borrowers, investors and businesses. Maybe, maybe not.
What if all these were signs of a coming financial crisis in 2021/22?
With the benefit of hindsight, putting 1 million euros into a bank account and enjoying a near zero interest, instead of investing the one million in assets suffering a 15-20% loss during the next crisis might seem wise by 2025. Similarly, negative mortgages might be fair having a 10% haircut on property prices in some EU countries in the early 2020s.
FT 17 August/18 August 2019
Governor Matolcsy, MNB, the Central Bank of Hungary