100 Swiss francs take-off, 97 francs to get

American economists have presented in the last years, numerous proposals for the Reform of the financial system that were considered in the critical Swiss Public as an attack on the cash. The International monetary Fund (IMF) in Washington has now submitted a working paper, and its contents, the attention could cement a position in this country even stronger. 31 pages with the title "Monetary Policy with Negative Interest rates: Decoupling Cash from Electronic Money" is the burning question, how to prevent savers in a economy crisis, their assets in the Bank in cash to withdraw.

The two authors propose to increase the price of the money, for example by a penalty interest rate of 3 percent. Simply put it means that anyone Who wants to withdraw 100 francs, receives at an ATM, only 97 francs in Cash. The longing is cash?

Every man has, of course, limit his own pain. But savers should consider holding Cash three times, when, due to a exorbitantly high penalty interest rate of 100 francs, for example, only 85 Swiss francs remained. "Our discussion shows that this System is technically possible, and no drastic changes in the mandates of Central banks would require", i.e. in the working paper.

Less room for manoeuvre in a recession

The debate highlights a major Problem of monetary policy. All the Western Central banks have kept their interest rate in the past few years to the lowest level in its history, and, although the economy is neatly grown. The Bank holds a European Central the key interest rate still at zero percent. The Problem: What can Central banks do when the next global recession, even if the policy rate is already so low?

One possibility would be to bring the people in any Form, their high Savings. This surge in demand could boost the economy. This is the purpose of the IMF working paper. Savers need to fear a devaluation of their assets, spend their money quickly. The introduction of high negative interest rates on account balance is not sufficient, however, because savers would withdraw their money under the mattress. It is only when the possession of cash would also be sanctioned, it could unfold the measure their full effect.

Both of the authors of the study used to be for the Swiss national Bank (SNB). This does not mean that we are designing at the SNB plans on how you could implement in Switzerland the devaluation of cash. On the other hand, the author throws a shaft of light on what the Central Bank Guild is thinking – "just in case". Again and again, the IMF continues its work papers as a test balloon in order to feel like certain topics academically and politically. In the case of the SNB, you do not want to comment on the matter. Even if no one says openly, it is nonetheless clear that the implementation of such plans with the national Bank nothing. With their new series of banknotes makes the contrary clear that they want to continue to back the cash.

"Huge communicative challenge"

"cash, a flight offers the possibility of negative interest rates," said Stefan Bielmeier, chief economist of DZ Bank. "The ongoing debate about a stronger push Back of cash in the economies is a consequence of the decreasing scope of action of the Central banks within the classical monetary policy," said Bielmeier.

the authors of The IMF working paper emphasize as an advantage that the measure of a cash devaluation is reversible at any time. A big disadvantage you have identified, however, because the introduction of the penalty rate on cash would be a "tremendous challenge in terms of communication". That's probably true. It sounds a bit of an understatement.

(editing Tamedia)

Created: 14.03.2019, 11:13 PM