pknoeber - 1/30/2016 07:59 Those costs are mostly for large institutional investors. The negative rates would hit the big boys a lot harder than smaller banks. The negative interest rates only apply to money that the banks actually have parked at the gov't bank (in our case it would be money that banks have parked at/in the fed and it's related instruments). As an example, at the bank I work at, we have X million dollars at the federal reserve, X million dollars at our correspondent bank (that's like the bank we use as our bank), X million dollars in loans and X million dollars in various other items. What the negative interest rates will do is discourage us from parking X million dollars in the fed. So, now what do we do with that money? We have to re-allocate it amongst either bonds, loans or just letting it set in an account at the correspondent bank. All of those will drive interest rates down, b/c it creates new bond demand, and/or new motivation to make loans, and to make loans you generally either take on increasingly risky customers or you reduce interest rates and go after good borrowers from other institutions. Here's the problem with all of these approaches, just like WYDave has said... It's like pushing a rope. That doesn't do anything at all. The economic activity of the world is in a lull, so there's nothing at all pulling on that rope.