In an article of the Dutch newspaper Het Financieele Dagblad, Mary Pieterse-Bloem, Professor of Financial Markets at Erasmus School of Economics, discusses the results of her research into the effects of negative interest rates.
Slowly, negative interest rates are disappearing as a policy instrument. Based on research, it is concluded that negative interest rates do not lead to the desired effect of consumers spending more money, thereby driving inflation. A negative effect can be seen: people bought property rather than saving money in the bank, causing prices in the housing market to rise.
Research
Mary Pieterse-Bloem and co-author Sylvester Eijffinger, Emeritus Professor of Monetary Economics (Tilburg University), concluded with their study of European Central Bank (ECB) policies that the last two ECB presidents have pursued policies that have pushed the boundaries of what the ECB does as a central banker. Namely, they started buying sovereign debt, effectively keeping interest rates between euro countries relatively close together.
Regarding negative interest rates, Pieterse-Bloem and Eijffinger concluded that negative interest rates had no effect on interest rates between countries for borrowing money in the capital market. This is because the negative interest rate applied to short-term borrowing, while countries mainly borrow money for the long term.
Additionally, Pieterse-Bloem and Eijffinger have given their view on this exact subject in a VOXEU column and a CEPR discussion paper. In these articles, more substantive information can be found.
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You can download the full article Het Financieele Dagblad, 29 September 2022, above.