By Greg Robb | MarketWatch
Ben S. Bernanke, former chairman of the U.S. Federal Reserve, is now open to the use of negative rates.
MarketWatch) — The Federal Reserve should consider using negative rates to counter the next serious downturn, said former chairman Ben Bernanke in an interview with MarketWatch.
“I think negative rates are something the Fed will and probably should consider if the situation arises,” Bernanke said in the interview last month.
Former Fed Vice Chairman Alan Blinder urged the Fed during the financial crisis to set negative interest rates for overnight deposits — essentially charging banks a fee to park funds at the central bank.
Blinder argued this would force banks to find more productive uses for the money.
Bernanke and his colleagues opted not to push interest rates below zero, worried that the costs outweighed the benefits.
In particular, there was a concern that money-market funds wouldn’t be able to recover management fees.
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