(Bloomberg) --
Former Swiss National Bank Vice President Jean-Pierre Danthine expressed skepticism whether negative rates generally help boost demand, according to an interview in Le Temps.
“There is a real debate in academic circles over the efficacy of negative benchmark interest rates,” he said. “For a normal economy -- Switzerland, with its safe-haven currency, is an exception -- does it really stimulate economic activity? Personally, I have big doubts.”
Read More: Draghi Primes ECB Easing That Will Test Global Currency Defenses
Danthine was one of the SNB officials who in 2015 decided to scrap an upper limit on the franc and cut the deposit rate to a record-low -0.75% to stem appreciation pressure on the franc as the European Central Bank embarked on quantitative easing.
Now, euro-area officials are poised to take interest rates even more negative. That may prompt the SNB to deliver a cut of its own, to maintain the yield spread.
To contact the reporters on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net;Thomas Mulier in Geneva at tmulier@bloomberg.net
To contact the editor responsible for this story: Fergal O'Brien at fobrien@bloomberg.net
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