The era of zero interest-rate policy is believed to have begun in 2008, as a consequence of the global financial crisis, and in an attempt to pull the world economy out of the doldrums.
After close to a decade of near-zero interest rates, central banks across the globe now seem to have conceded that their experiment has fallen short, and are now embarking on a new era of negative interest rates ("Why are central banks charging for deposits?"; Feb 13).
The biggest losers in such an interest rate environment are savers. Indeed, the theory behind negative interest rates is to so severely "punish" savers that they would instead spend their money on goods and services, thus giving the economy a boost.
However, the theory may not work perfectly, as it seems also likely that many may save even more to offset the additional costs on their savings.
Alternatively, people may withdraw money from the banks and stash their cash at home, despite the risk of burglary, or use that money to buy gold which, incidentally, has recently risen substantially, in part as a reaction to negative interest rates ("Gold regains shine as punters seek safer havens"; Feb 13).
What I would be particularly concerned about is the possibility of a massive withdrawal of deposits from our local banks, which would put the institutions under enormous stress, especially in the wake of higher non-performing loans ("Singapore's slowing economy adds to bank risk as loans slump"; ST Online, Aug 11, 2015).
The recent sell-off in bank shares serves as a reflection of investors' worry about the effect of negative interest rates on banks ("Bank shares plummet amid race to cut rates"; Feb 13).
Overall, the world enters unchartered waters with negative interest rates, and Singapore needs to tread carefully.
Chan Yeow Chuan