Serious situation in spring 2015 Exchange rates  Unit labour costs 115 140  115  140  Germany USA Sweden  130 105  105  95  95  85  EURGBP  130  120  120  110  110  100  100  85  EURUSD EURSEK  75 Jan-14  75 Jul-14  Jan-15  Jul-15  Jan-16  Jul-16  90  90 05  07  09  11  13  15  Note. The ECB communicated its decision to purchase securities on 22 January 2015 and initiated purchases on 9 March 2015. Exchange rates, index, 1 January 2014 = 100. Unit labour costs in manufacturing industry, euro, index, 2011 = 100. The blue square indicates the effect of the krona appreciating by 30 per cent against the euro. Sources: The ECB, Macrobond and Conference Board Figure 9. Rising trend in housing prices and debts for 20 years despite varying repo rate Index 2000 Q1 = 100  Note. Housing prices have been converted from nominal to real terms by using the CPIF. Sources: Statistics Sweden and the Riksbank  18 [20]  Figure 10.
When the repo rate is negative, the banks pay interest to the Riksbank, as the banking system as a whole has a liquidity surplus that must be deposited in the Riksbank. The short-term interbank rates, that is interest on loans between the banks, and some government rates have followed the repo rate down below zero. However, the banks have not introduced negative deposit rates for households and most companies. Only a few economic agents, primarily other financial institutions, large companies and some municipalities, have experienced a negative deposit rate, and these can in some cases also borrow at a negative interest rate. Companies have been forced to expend a certain amount of resources on avoiding negative return on their funds, but they appear to have succeeded relatively well in this. Cutting the repo rate below zero has thus in total contributed to pushing down interest rates, but has not meant that interest rates have become negative for the general public. Good profitability among the banks and few signs of a decline in demand Another fear has been that negative interest rates reduce the banks’ profitability, which could lead to higher lending rates and a lower supply of credit. The reason for this is said to be that the banks’ deposit margin, that is, the difference between the interest on deposits and lending, would decline because it is difficult to cut the deposit rate below zero.