Negative interest rates set by the European Central Bank:
A) encouraged banks to lend excess reserves, but also discouraged the deposits that provide those excess reserves.
B) encouraged banks to lend excess reserves and customers to increase deposits.
C) encouraged people to turn cash into electronic bank balances.
D) discouraged bank lending.

Question

Quizplus · Accepted Answer

Negative interest rates encouraged banks to lend excess reserves to avoid paying to hold them, but also discouraged deposits as they would yield negative returns.

Negative Interest Rates Set by the European Central Bank