Some central banks have been moving to a negative interest rate policy (NIRP). The European Central bank (ECB), the Bank of Japan (BOJ), and the central banks of Denmark and Switzerland have currently adopted the policy.
The U.S. Federal Reserve has not ruled out the option. The hope is that negative interest rates, typically applied on excess reserves, will spur banks to make more loans. The additional loans are then expected to stimulate the economy by increasing investment and consumption.
But NIRP poses significant risks. Many believe the policy is an act of desperation; the world's central banks have run out of policy options. No one knows if the new policies will work.
If negative interest rates were passed on to consumers, a saver would have incentive to hold cash instead of depositing it in the bank—defeating the policy. If the negative interest rates were not passed on to consumers, bank margins would fall and could create more stress in the world's financial and banking system. The policy would create a catalyst for cash controls. Additional lending could also increase financial risks.
Negative interest rates can result in unanticipated and even bizarre outcomes. Contagion is possible as negative yields are increasingly common with European government debt instruments. Incentives switch from a focus on saving to spending. But there is evidence that some European retirement savers have decreased consumption and increased their retirement contributions to account for the negative interest rates. Consumers would want to pay their bills early, while those receiving payments would prefer delay.
In the kingdom, we operate under the law of reciprocity. Our deposits are earthly with heavenly implications. We are promised fruit, in this world and in the next, with no risk. When Jesus is our Lord and Savior we can expect a deeper relationship, more clear direction and His favor. Specifically, we should:
1. Give forgiveness that we may be forgiven:
"For if you forgive men for their sins, your heavenly Father will also forgive you" (Matt. 6:14, MEV).
2. Give to the poor and we will be blessed:
"Blessed are those who consider the poor; the Lord will deliver them in the day of trouble. The Lord will preserve them and keep them alive, and they will be blessed on the earth, and You will not deliver them to the will of their enemies. The Lord will sustain them on the sickbed; You will restore all his lying down in his illness" (Ps. 41:1-3, MEV).
"He who gives to the poor will not lack" (Prov. 28:27, MEV).
3. Give as directed by the Lord and He will bless us:
"Give, and it will be given to you: Good measure, pressed down, shaken together, and running over will men give unto you. For with the measure you use, it will be measured unto you" (Luke 6:38, MEV).
4. Live a life of sacrificial giving and we are promised multiplication. But be ready for the persecution:
"Jesus answered, 'Truly I say to you, there is no one who has left a house or brothers or sisters or father or mother or wife or children or fields, for My sake and for the gospel's sake, who shall not receive a hundred times as much now in this age, houses and brothers and sisters and mothers and children and fields, with persecution, and in the age to come, eternal life'" (Mark 10:29-30, MEV).
As citizens of the kingdom, we have sure promises that will not fail. The world's system is filled with disappointment and risks. The choice is up to us. We need to seek the kingdom and His righteousness first (Matt. 6:32-33) and store up treasures in heaven where moth and rust cannot destroy and thieves cannot steal (Matt. 5:19-21).
Dr. James R. Russell is professor of economics and chair of the Undergraduate College of Business at Oral Roberts University in Tulsa, Oklahoma.
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