RBS's Davies: Negative Rates in Line With a Lot of Banks

The transcript discusses a bank's recent changes to terms and conditions, which were misunderstood and received significant press coverage. The changes aimed to align with other banks' practices, particularly regarding negative interest rates. The speaker, a banker and economist, expresses concerns about negative rates, suggesting they create perverse incentives and limit central bank control. He advocates for targeting a higher inflation rate to avoid these issues.

Why did the bank change its terms and conditions recently?

• To introduce new banking products

• To align with other banks' provisions for negative interest rates

• To increase customer fees

• To simplify the banking process

What is the main reason for aligning with other banks in the trading area?

• To offer better interest rates to customers

• To reduce operational costs

• To handle large inflows of cash without incurring central bank charges

• To expand into new markets

What is the speaker's personal stance on negative interest rates?

• They are beneficial for economic growth

• They help in stabilizing the banking system

• They create perverse incentives in society

• They are necessary for controlling inflation

What concern does the speaker express about targeting a low inflation rate?

• It encourages excessive spending

• It may result in losing control at the lower band

• It causes frequent economic booms

• It leads to high unemployment

What does the speaker suggest about the central bank's control when negative interest rates are in place?

• The central bank gains more control

• The central bank loses control once the lower band is reached

• The central bank can easily predict economic responses

• The central bank can stabilize the economy quickly