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Low Interest Rates: Consequences and Dangers

In: European Union and Monetary Union in Permanent Crisis I

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  • Dirk Meyer

    (Helmut-Schmidt-Universität)

Abstract

The “exceptional measures” of expansive monetary policy have, inter alia, led to low, negative and punitive interest rates. Taking into account the inflation rate and the interest rate discount, negative returns, ie substance losses, have been resulting for savings deposits and federal bonds for years. An interest rate increase would dramatically increase the interest burden on states, with maturity mismatch of financing threatening banks with illiquidity and companies with loss of profitability. The risks to the financial stability of banks and Eurozone states are immense.

Suggested Citation

  • Dirk Meyer, 2022. "Low Interest Rates: Consequences and Dangers," Springer Books, in: European Union and Monetary Union in Permanent Crisis I, chapter 0, pages 57-78, Springer.
    • Handle: RePEc:spr:sprchp:978-3-658-38643-6_4
    DOI: 10.1007/978-3-658-38643-6_4
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