By Jeanette Garretty, Robertson Stephens Advisors

Negative interest rates are back in the news with the very vocal protest by Bank of Tokyo Mitsubishi UFJ (BTMU) over the Bank of Japan’s negative interest rate policy. Currently, Japanese Government Bonds are yielding -0.12% and the Bank of Japan has discussed lowering that yield to –0.3%; BTMU has threatened to pull out of the consortium of Japanese banks serving as primary dealers in these bonds. It should be noted that such an action would have a minor-to-nonexistent impact on the market for Japanese Government Bonds and/or the Bank of Japan’s ability to market those bonds. Nevertheless, the announcement by BTMU brings to the fore, once again, the question of what can be achieved with negative interest rates and whether the unintended consequences mitigate any possible benefits.

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