Cash may be king but it’s going to cost the subjects. Negative interest-rates are here and that’s rarely a good sign. Click through for the two-page explanatory note sent to clients by BNY Mellon. A 13 basis point fee will be charged on accounts with an average monthly balance of over $50m “per client relationship”. An additional fee will be levied if 1-month T-bill yields fall below zero; at pixel-time they were yielding a quarter of a basis point.
There’s no word yet on whether other banks will follow — but we’d be surprised if BNY Mellon wasn’t about to start a trend. In the meantime, as Real Time Economics discusses, this is life in the liquidity trap — US bank holdings of cash have increased by 83 per cent (to $1,980 billion from $890 billion) so far in 2011. And with the US treasury not restarting T-bill issuance under the Supplemental Financing Programme, obvious alternatives for cash are in short supply and high demand.
BNY Mellon to charge on $50m-plus deposits – FT