Negative interest rates are an unconventional monetary policy where commercial banks pay the central bank to hold their deposits, instead of earning interest. The goal is to push banks to lend more rather than hoard money.
Central banks resort to negative rates when conventional rate cuts (to near zero) fail to stimulate the economy. By making it costly to hold reserves, banks are incentivized to lend.
The impact: bank profitability may suffer, depositors earn no interest (or even pay charges), but the policy aims to boost investment and consumer spending in the economy.
Countries like Denmark, Japan, Sweden, and Switzerland have implemented negative rates in the past. Bangladesh has not adopted this policy — interest rates remain relatively high in the country.