Balance Quote by Joseph Stiglitz
“Negative interest rates hurt banks' balance sheets, with the 'wealth effect' on banks overwhelming the small increase in incentives to lend.”
About This Quote
Negative interest rates aim to stimulate lending but can erode banks' profitability, making the net benefit to the economy uncertain.
In simple terms: Negative rates may boost lending but hurt banks.
Key Takeaway
Weigh the trade‑offs of policy tools.
Themes
economics
policy
banking
Mood
critical
concerned
Type
analytical
policy
When to use this quote
- central bank decisions
- investment strategies
- consumer credit
Key Concepts
monetary theory
financial stability
Questions to Reflect On
- When do the costs to banks outweigh the benefits to borrowers?
- How can policy mitigate negative side effects?
![“World War II was really unusual, because America was in the Great Depression before. So the war did help the US economy to get securely out of this decline. This time, the war [in Iraq] is bad for the economy in both the short and long run. We could have spent trillions in research or education…” quote by Joseph Stiglitz](https://sms4smile.com/quotes/img-quotes/860/joseph-stiglitz-1351_america_world-war-ii-was-really-unusual-because_156000.jpg)
