Negative Interest Rate Policy

Under a negative interest rate policy (NIRP), a central bank charges commercial banks for holding extra money with it. The idea is to make hoarding cash painful, pushing banks to lend it out and investors to take more risk. It once sounded impossible. Then it happened: the European Central Bank, the Swiss National Bank, the Bank of Japan and Sweden's Riksbank all went below zero in the 2010s.

Negative rates tend to weaken a currency and fuel the carry trade, as investors borrow the cheap currency to buy higher-yielding ones. Critics say they squeeze bank profits and savers. Most central banks that tried it have since climbed back above zero.