Is Banking Better in Bed?

Interest rates are the lowest ever—lower than zero in Japan and parts of Europe. Records go back only to Mesopotamia in 3000 B.C., but it’s unlikely anyone before then would have dreamed up something as weird as negative interest. Today some banks routinely charge for accepting cash instead of paying depositors for the use of their money. German railroad Deutsche Bahn can issue a bond with an ironclad promise to pay back investors less than it borrowed from them.

As envisioned by central banks, negative interest rates boost growth by encouraging people to borrow for consumption or business. They induce investors to finance promising ventures by suppressing the return they get on safer investments, such as Treasury bills. And they can give countries an edge in trade by suppressing the value of their currencies.