It is inconceivable and impossible for a central bank to pursue a negative-interest rate policy because interest rates simply cannot turn
negative.

Question

Quizplus · Accepted Answer

Negative interest rates have been implemented by central banks such as the European Central Bank (ECB) and the Bank of Japan (BOJ) in recent years in an attempt to boost economic growth and combat deflation. In a negative interest rate policy, the central bank charges commercial banks for holding excess reserves, thus incentivizing them to lend more money and stimulate the economy. While it may seem counterintuitive, negative interest rates are possible because the cost of holding physical currency is higher than the negative interest rate, thus making it more desirable to keep money in a bank account.

It Is Inconceivable and Impossible for a Central Bank to Pursue