Negative Interest :panacea or placebo

Article contributed by Dr. Deep Chandra Oli, Associate Professor, Faculty of Commerce and Business Management

In  the common parlance interest has been defined as the price  or cost of capital or cost of money .The underlying postulate in economic theory is the scarcity of resources .Interest is paid when one uses someone else’s money this is the edifice on which entire economic theory has been architect. The borrower agrees to pay the lender for using money provided to borrower .  In other words borrower compensates the lender by paying interest for keeping him out of funds for a certain period .

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