IGTA Journal - Summer 2020

Luxemburg, Article: Up to which level can negative rates help highly indebted States? By Francois Masquelier, Chairman of ATEL, the Luxemburg IGTA Member Association, and Deputy Chairman of EACT, European Association of Corporate Treasurers, from Simply TREASURY – Luxembourg, August 2020 The Covid crisis has obviously exacerbated the indebtedness level of all Western economies. To sustain the global economy, all developed countries have injected liquidities into the market via debt increases. Central banks have been hyper accommodative on monetary policy side to support the economies. Of course, negative rates when government debts are not floored help servicing the debt. The longer the debt the cheaper States must repay. Time is money for State or public borrowers. IGTA eJournal | Summer 2020 | 32