ECB’s Draghi Hints at Drawbacks of Negative Rates

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ECB’s Draghi Hints at Drawbacks of Negative Rates
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Negative interest rates, a tool used to encourage banks to lend, are starting to worry the ECB

FRANKFURT—European Central Bank President Mario Draghi signaled Wednesday that the bank is starting to worry about the adverse effects of negative interest rates, a controversial policy tool it introduced almost five years ago to encourage European banks to lend.

Negative interest rates force commercial banks to pay to park funds at the central bank. By reducing borrowing costs, they should make it more attractive for companies and households to borrow, spend and invest. The policy also typically weakens an economy’s exchange...

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