/lit/ - Literature

[Anonymous No.14044562]

any book that can explain to me what are negative interest and negative yields?

[Anonymous No.14044750]

The central bank is the final clearinghouse for interbank transactions. That is, when you write a check to someone who uses a different bank, in order to clear the check, your bank has to pay their bank, and the two banks pass the loss/gain on to you and the person you wrote the check to. The payment is handled by a higher-level bank, where the banks themselves have accounts (which are called reserves). The highest level bank is the central bank, where the highest level domestic interbank transfers are reconciled.
This means that the highest level banks (which includes the ones you've heard of, Wells Fargo and the like) have accounts at the central bank. "The interest rate" is the rate banks get on their reserves, either directly from the central bank, or through interbank lending. A negative interest rate is a case where, in effect, the central bank charges the major banks to keep money in their reserve accounts, and the major banks then pass those costs down to their customers.
This is all based on the fiction that banks lend reserves, so charging banks to keep reserves is supposed to encourage them to lend. But that's a different story.
As for books, Understanding Modern Money by Randall Wray will give you much more detail about these dynamics of (both central and reserve) banking.

[Anonymous No.14046068]

>>14044562
>>>/biz/