Negative Interest Rate On Euro

Central banks are in a "race to the bottom", or an effort to lower the domestic currency to improve economic performance. The European Central Bank (ECB) may soon see exactly how low it can go by implementing negative interest rates. When a commercial bank makes a deposit with a central bank, the central bank pays the commercial bank interest on that deposit. The ECB is considering a negative interest rate on those deposits, which means the commercial bank would pay the ECB for all deposits. The result is that commercial banks will deposit fewer euros with the ECB and instead be forced to put those euros in circulation. This would likely lead to a euro devaluation.