Interesting article in The Guardian about the possibility of banks implementing negative interest rates.
The impact on credit unions is not likely to be massive as we have all got used to managing with very low rates of return on our deposits. Negative interest rates could result in credit unions having to pay banks to hold their money in a savings account.
This article suggests that moving to negative rates is unlikely unless the economy fails to make the predicted recovery in the latter part of 2021. The Bank's Governor Andrew Bailey has said: "there is a difference between having negative rates as part of the toolkit and actually using them".
Members Concerns
Following the Guardian story, some of our unions raised the following concerns.
1. "Fall in income from bank deposits will impact on ability to pay a dividend"
2. "Attract more savers to credit unions meaning that we have more money deposited in the banks"