Boost for Bitcoin (BTC), Danish Central Bank Applies Negative Rates to Retail Accounts
Danes holding more than $16.26k or 100k Danish Crowns (DKK) will pay to save after their central bank, the Danske, lowered the applicable threshold from 250k DKK in response to increased deposits to the bank, an update on Apr 26 reads.
The Age of Negative Rates
Unless otherwise, Danes have alternatives, a majority would end up paying the central bank.
On the other hand, the bank would get relief since the influx of deposits since November last year has been a considerable expense that wasn’t suitable in the long run.
Mark Wraa-Hansen, the central bank’s head of personal customers, said:
“We have experienced highly unusual interest rate levels for a long time now, and there is no prospect of this changing. At the same time, we see a significantly increasing deposit surplus, which in the current interest rate environment results in a considerable expense for the bank. This is obviously not sustainable for us in the long term.”
Most Danes will Pay to Save
A -0.6 percent annual rate now applies to all deposits above 100k DKK in what would affect a large swathe of the population beginning July 1.
Recent data reveal that an average employee in Denmark earns 43,487 DKK before taxes, including pension, which accumulates to around 338,122 DKK every year.
On the other hand, an average couple with two children has an average of 1,026,376 DKK in pretax income.
The central bank has been lowering the applicable threshold since last year. It first dropped the level from 1.5 million to 250k DKK.
From a monetary policy point of view, the goal is to encourage Danes to spend rather than save since the once unthinkable move is more of an economic stimulus.
It can be an effective means to supplement the bank’s reflation but coming at the expense of savers and a boost for cryptocurrencies like Bitcoin.
A Case for Bitcoin and Crypto
Countries worldwide continue to intervene. Central banks are more accommodative as they struggle to contain the effects of the coronavirus pandemic.
In response to increasing dalliance with negative interest rates, Bitcoin—which has evolved to act as a store of value–has been ripping higher with every announcement of money printing or QE extension.
As BTCManager reported earlier, the Winklevoss Twins predict the BTC price to reach $500k in the next few years due to the FED’s monetary policy mismanagement. The banding of central banks to drop rates below zero could spark renewed interest in safe-havens, including Bitcoin, accelerating the expansion to six digits.