The Executive Director (Newbdo & ECER), Georges Remboulis gave his thoughts about how negative interest rates take central Banks and Investors in Europe into surreal territory on his LinkedIn account.
In his explaination, he said that central Banks in Europe and majorly in Japan are entering negative bond yield territory. The federal reserve is implementing quantitative easing with ETF Buying, $1.8 billion in the first 6 days of the program. In addition, very low and negative interest rates provides cheap money to offset cash flow issue. These negative rate puts the population in a situation of spending and motivates riskier investments, whilst they cannot benefit from such loans, as do public companies and investors. This raises many questions, as in parallel there’s large unemployment with people losing there jobs that may not return. Many analysts call for a “V” recovery yet not covering economic contraction in the longer term. There are mixed signals of inflation, stagflation and deflation (which would result in negative bond yields). Are financial markets QE being supported by all this, outside of basic fundamentals? How is this in conjunction with short term Trillions required to support unemployment and SME’s? Is this a reconfirmation of continuing liquidity issues? How will this affect pension funds in the long term? Are traditional economic indicators a true reflection of reality? What is the true motivation of the rising pilots of digital currencies?
Some economic insights from Mr. Georges Remboulis based on bonds and QE. This is an affecting factor for banks and crypto exchanges including CBDC and digitalcurrencies.