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Negative interest rates are a resource used by central banks with the aim of generating a positive impact on economies. Japan is one of the countries that has used this strategy. However, now he wants to leave it behind, although his economy is not going through a great moment.
The various economic and financial contexts lead central banks to take measures that allow them to protect a nation's economy. This is how in 2014, several European countries, such as Denmark and Sweden, began to implement negative interest rates and in 2016 Japan did the same.
Central banks can establish this monetary policy to stimulate economic activity in times of slowdown or recession.
By making it more expensive to hold money and cheaper to borrow, people and businesses are expected to spend and invest more, which can boost economic growth and combat deflation, as is happening in the 'Land of the Rising Sun'.
However, negative interest rates can also have secondary effects by affecting banks' revenues and limiting their ability to lend. Furthermore, they put financial stability at risk, which could cause unpredictable reactions in the markets.
Despite the efforts of the Central Bank of Japan, the country's economy faces persistent challenges such as stagnant growth and low inflation. This has led to debates about the effectiveness of negative interest rate policies and the need to explore other options to boost the economy.
For this year, Japan had announced the elimination of this strategy, which began to be implemented eight years ago, after it became known that its economy is in recession, and left the podium of the three strongest economies to place itself in fourth place.
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