EU Negative Interest Rate Policy in Cyprus
As of March 3 2020, Hellenic Bank Plc will start charging negative interest rates on deposits exceeding EURO 100,000. In accordance with the Cyprus News Agency these will only be applicable to corporate account holders.
The charge is expected to be 0.60 per cent.
It is possible that other major Cypriot Banks will follow.
Negative interest rates are being introduced in many countries in the EU due to the introduction by the European Central Bank of negative interest rates in June 2014, lowering the deposit rate to -0.1%. Negative interest rates were introduced in order to encourage Banks to lend to businesses rather than holding deposits in order to stimulate the economy.
In practice the Banks are actually being penalised by fines for holding deposits and thus prefer making profits by providing loans and offering investment services.