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Banks are special because they can deposit money with the central bank. The central bank won't disappear, and like most money it's just numbers in a database (nothing "backing" them) so there's no risk associated with these deposits.

But in the EU, the deposit rate set by the ECB is -0.40%. So that would explain why EU banks would be willing to buy negative yielding bonds instead to hold in reserve, as long as the yields on those are less negative.

But then the yield on German bunds is actually even lower, hitting -0.60% recently, so it's not just that.




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