Negative interest rates are cancelled.

ING Bank, following Rabobank, announced an increase in interest on deposits for wealthy clients. If now ING customers who have more than 100 euros in their account pay interest on keeping their savings, then from October 000 they will no longer have to do this - the interest will be zero.

What are negative interest rates?

Low or negative interest rates are a tool to stimulate investment, that is, the investment of free capital in the economy. To make a profit, money must work, and not lie "dead weight" in the bank. The introduction of negative interest rates on deposits is associated with the level of inflation.

Retrospective

Prior to the 2008 financial crisis, negative rates were rare. After the crisis, most central banks stimulated the economy with low and even negative rates.

In 2011, the European Central Bank (ECB) began to cut interest rates. In 2012, the ECB deposit rate fell to 0%, and since 2014 it has become negative. Commercial banks have to pay to hold required reserves with the ECB. Accordingly, banks set zero or negative interest rates for depositors depending on the size of the deposit - more on this in our article.

What now?

Interest rates on deposits in Dutch banks:

Changes

Rabobank will raise the interest rate for customers with more than 100 euros in the bank from August, ING (Internationale Nederlanden Groep) from October. Rabobank customers still have to pay to keep their money in the bank, but for less, and ING customers no longer have to pay interest to keep their savings in the bank.

What are the reasons for the changes?

The decision of the two banks to cancel the negative interest rate followed the announcement by the ECB that the interest rates that banks have to pay for deposits with the ECB will rise in July. Now they are -0,5%, and in July they will be -0,25%.

The factor of inflation played its role. The ECB is raising interest rates to curb high inflation. Although analysts expect that the interest rate will still be negative at the end of this year: -0,25%. Banks will still have to pay for depositing savings with the ECB.

Results

Most of the savings market in the Netherlands is controlled by three banks - Rabobank, ING and ABN Amro. ING is ending its negative interest rate for wealthy clients from October. Rabobank has taken a step towards this by raising its interest rate since August. Only ABN Amro did not make a decision on this issue. But in general, it is possible to speak about a shift from the dead center of the situation with a negative interest rate - there is a positive trend in resolving this issue.