Some commentators wondered whether we would consider taking this rate to negative territory, and many of those drew comparisons to the Danish case, where the central bank had decreased the rate on certificates of deposits to minus 20 basis points in July 2012. The possibly negative deposit rate is one facet of the so-called “Zero Lower Bound” debate.
The industry needs to respond to this challenge by developing a greater diversity of business models, more diverse and stable income sources, and more rigorous risk management and stress testing techniques to assess its preparedness to deal with any downturn in economic activity.