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There's a huge difference between negative interest rates on the part of the government as a lender and as a borrower.

As a lender (ie, giving out loans that only need to be paid back in part), they mean the gov is essentially giving away money (which constitutes an incredibly corrupt bargain with the banking establishment, but is obviously distortionary on face regardless of who's getting the deal).

As a borrower (ie, charging to hold money at the fed) they're essentially collecting a fee for various regulatory and quasi-seigniorage services. For instance, if you require assets to be held in certain forms (central bank deposits, government bonds...), a negative yield is basically charging for providing an asset that satisfies those regulatory requirements.




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