Article explaining recent research paper to address the big problem with forced negative interest rates – depositors would see the numerical value of their bank deposits go lower & withdraw the cash to put it into their safety deposit box or to store it at home .. Miles Kimball, professor of economics at the University of Michigan, explains that flight to cash could be prevented in the latest economic review from the National Institute of Economic and Social
Research (NIESR) .. the basic idea is to attribute a negative interest rate for banks to accept physical cash if you deposit the cash into your bank account & to set this negative rate higher (more negative) than the negative interest rates you are getting at the bank account .. that way you are not only encouraged to spend your money before you have less of it, but also to bring in your physical cash as quickly as possible to the bank before it losses even more value faster .. “Paper money would be depreciating in value more quickly than electronic money. In effect, paper money would have higher inflation than electronic money.”