Glossary · Money and central banks
Negative interest rates
A negative interest rate means lenders pay to lend: a bank that parks money at the central bank gets back a little less than it put in.
Also called: negative rates, NIRP, below-zero rates
June 2014 to July 2022; lowest −0.50%
Switzerland and Denmark, 2015; BIS data
Of 38 in the BIS table, Oct 2026
In plain words
Normally, if you lend money you get paid for it: put $100 in a savings account at 2% and you have $102 a year later. A negative interest rate turns this upside down: at −0.5%, $100 left for a year comes back as $99.50. You pay to keep your money there.
It sounds absurd, but several central banks did it for years: the European Central Bank from June 2014 to July 2022, and the central banks of Switzerland, Denmark, Sweden and Japan. They charged commercial banks for money parked with them, to push the banks to lend it out instead and to fight prices that were barely rising or even falling.
Ordinary savers were mostly spared: banks rarely passed negative rates on to small accounts, though some charged big companies and wealthy clients. But at the peak, trillions of dollars’ worth of government bonds, mostly in Europe and Japan, paid negative yields: investors paid governments to hold their money.
Example
A bank with €1 billion of spare cash in 2019
- The ECB’s deposit rate is −0.5% a year.
- Parking €1 billion at the ECB for a year costs the bank about €5 million.
- Lending it to a company at even 1% earns about €10 million instead, so the bank has a reason to lend.
- In October 2019 the ECB softened the blow with a two-tier system: part of each bank’s spare money was exempt from the negative rate.
That is the theory: make hoarding cash expensive, so money flows into loans and spending.
One level deeper
Why can rates go below zero at all? Economists used to think zero was a hard floor, since anyone could hold banknotes instead. But storing and insuring billions in banknotes costs money too, so banks accept a small negative rate rather than fill vaults with cash. The floor turned out to be somewhere below zero, not at zero.
The lowest key rate in the BIS data is −0.75%, set by Switzerland and Denmark in 2015. Both were fighting money flooding into their currencies: Switzerland to stop the franc from soaring, Denmark to keep the krone pegged to the euro.
Did it work? Lending and growth held up better than critics feared, and the predicted flight into cash never came. But negative rates squeezed banks’ profits, which can make them lend less, and pushed savers and pension funds into riskier assets. Sweden left negative rates in 2019; the euro area, Switzerland and Denmark in 2022, when inflation surged; the Bank of Japan was last, in March 2024.
The central banks that went below zero
Key rates since 2008. All five went below zero in the 2010s. In Oct 2026, none of the 38 central banks in the BIS table had a rate below zero.
The numbers behind the chart
| Date | Euro area (ECB deposit rate) | Switzerland | Denmark | Sweden | Japan |
|---|---|---|---|---|---|
| Jan 2008 | 3.00% | 2.75% | 4.25% | 4.00% | 0.50% |
| Dec 2010 | 0.25% | 0.38% | 0.70% | 1.25% | 0.05% |
| Dec 2020 | −0.50% | −0.75% | −0.60% | 0.00% | −0.10% |
| Dec 2022 | 2.00% | 1.00% | 1.75% | 2.50% | −0.10% |
| Dec 2023 | 4.00% | 1.75% | 3.60% | 4.00% | −0.10% |
| Dec 2024 | 3.00% | 0.50% | 2.60% | 2.75% | 0.25% |
| Dec 2025 | 2.00% | 0.00% | 1.60% | 1.75% | 0.75% |
| Oct 2026 | 2.50% | 0.00% | 2.10% | 1.75% | 1.25% |
Why it matters
Negative rates were the boldest monetary experiment of the 2010s, and showed that interest rates can go below zero.
They dragged down yields on bonds and savings across Europe and Japan and pushed investors into riskier assets in search of income.
They remain in central banks’ toolkits for a future slump, so their record matters.
A common mistake
Myth: With negative rates, banks charge every saver to keep money in the bank.
In fact: Most banks never charged ordinary savers, fearing they would pull out their cash. The negative rate applied to banks’ deposits at the central bank, and some banks passed it on to large companies and wealthy clients.
Questions people ask
Which countries have had negative interest rates?
The euro area, Switzerland, Denmark, Sweden and Japan had negative key rates in the 2010s. The lowest, −0.75%, was set by Switzerland and Denmark.
Can a mortgage have a negative interest rate?
Rarely, but it happened: in 2019 a Danish bank, Jyske Bank, offered 10-year home loans at −0.5% a year, before fees.
Why would anyone buy a bond with a negative yield?
Because the alternatives looked worse: banks charged big depositors, storing cash costs money, some investors must hold safe bonds by rule, and others expected yields to fall further, which would raise bond prices.
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About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- Central bank policy rates, monthly (end of period): Bank for International Settlements (BIS), Central bank policy rates (WS_CBPOL), compiled by the BIS from each central bank; BIS SDMX API stats.bis.org/api/v1.
- ECB deposit facility rate: European Central Bank, ECB Data Portal, series FM.B.U2.EUR.4F.KR.DFR.LEV (key ECB interest rates: deposit facility).
- This page explains a term. It is not investment advice.