If one lends money, one will in both cases be able to consume less when one regains what one has lent, including interest. In the case of a negative real interest rate, this is because inflation is higher than the interest payment, and one is therefore unable to buy as much for the sum one receives from the borrower. If instead the nominal interest rate is negative, then the negative return is written into  2 Danmarks Nationalbank, the European Central Bank, the Bank of Japan and the Swiss National Bank also have  negative policy rates (a list of central banks’ policy rates can be found at centralbanksnews.info). It is worth noting that almost a quarter of global GDP is currently produced in countries where the policy rate is n egative. 2 [20]  the contract from the start, so to say, and perhaps this is what many feel goes against normal social and economic conventions. But regarded solely in terms of purchasing power, a negative nominal interest rate is not anything very special, in any case no more special than a negative real interest rate. General interest rates low but not negative Moreover, the fact that the repo rate is negative does not mean that general interest rates in Sweden are negative. The repo rate is a very special short-term rate that only the Riksbank's monetary policy counterparties encounter, including the major Swedish banks.
Let me complement that with one for markets: “Adapt and survive”. But let me add the positive rider - “Those who survive will thrive”. What is the role of the authorities in this future I have described? It is, very simply, to provide as best we can the economic and regulatory environment in which financial markets can do their job - of allocating capital to where it can be most productively deployed - more effectively. On the economic front that means steady growth with low inflation. On the regulatory front it means a framework of rules that provide for the transparency that is essential for the proper assessment and management of risk and sets clear behavioural standards which do not unnecessarily distort business decisions but provide clear guidance to market participants - whether they are end-users or intermediaries - as to what is expected of them and what they can reasonably expect of others. The picture I have painted is one of challenge and change. The flip-side of course is great opportunity. In fact there has never been a time when the markets here in London did not face change and uncertainty. But there has never been a time either when you, we, all of us, did not rise to the challenge. I am sure we will all do so again - and I wish you all possible success. 3  BIS Review 15/2000