Negative yields: Charting the surge in sliding rates; High internet use and state support help countries ditch cash

  • So-called “real” rates, adjusted for inflation, had often been negative, but before 2009 it was not thought feasible for nominal rates to dip below zero
  • In the wake of the global financial crisis of 2007-08, unusual measures became necessary and all leading policymakers adopted some form of quantitative easing
  • Roughly a quarter of the global bond market — including both government and corporate debt — now trades at sub-zero yields. Only 3 percent of the global bond market now yields more than 5 percent — the lowest on record

  • Most transactions around the world are still conducted in cash. However, its share is falling rapidly, from 89% in 2013 to 77% today
  • Despite the attention paid to mobile banking in emerging markets, it is rich countries, with high financial inclusion and small informal economies, that have led the trend
  • So far, cash has proved stubbornly difficult to stamp out completely. Handling cash is expensive, as more payments become digital, this burden will fall on ever fewer stores, shoppers and banks
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