The Fed should not pay negative rates but charge an access to the safe-haven fee.
Sir I am not sure Central Banks should charge interests below zero like Wolfgang Münchau writes in “Central Banks can adapt to life below zero” August 31, mainly because those negative rates should not permeate to other areas of the economy, and much less so to the public debt.
Instead, as I have proposed some time ago, the Fed should start charging an access to the safe-haven fee. The final negative return to the investor would of course be the same, but the reason why, would be more transparent, and we would save ourselves having to listen to politicians saying “they trust us so much they even lend us moneys at negative rates”. That would also improve the possibility of avoiding the risk of overcrowding the safe haven and turning it utterly unsafe.
Instead, as I have proposed some time ago, the Fed should start charging an access to the safe-haven fee. The final negative return to the investor would of course be the same, but the reason why, would be more transparent, and we would save ourselves having to listen to politicians saying “they trust us so much they even lend us moneys at negative rates”. That would also improve the possibility of avoiding the risk of overcrowding the safe haven and turning it utterly unsafe.
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