Countries with Negative Interest Rates 2025

An interest rate is defined as the price paid to borrow money. Negative interest rates mean that borrowers are credited with interest when they borrow money instead of being charged it.

Negative interest rates are an unconventional policy and can be used by central banks to stimulate their nation’s economy. When economic times are tough, people tend to hold onto their money and not spend it; however, this can further weaken the economy.

With negative interest rates, cash deposited at a bank yields a storage charge instead of the opportunity to earn income from interest.

While, in theory, negative interest rates should help to stimulate economic activity and prevent inflation, they could backfire causing banks to lose profit margins and lend less money. Additionally, deposit holders could stop withdrawing money from the banks, and the cash drain could lead to rising interest rates.

Sweden’s central bank was the first bank to use negative interest rates in July 2009, when the Riksbank cut its deposit rate to -0.25%. In June 2014, the European Central Bank followed suit, lowering its rate to -0.1%. Another reason for the European Central Bank to turn to negative interest rates is to lower the value of the euro. The thought behind this is that a weaker euro should stimulate demand for exports and, in turn, encourage businesses to expand.

Countries with Negative Interest Rates

As of September 2024, there are no central banks with negative interest rates. Three countries that had instituted negative interest rates, Switzerland, Denmark, and Japan, have since rescinded.

Switzerland

The Swiss National Bank (SNB) maintained a negative interest rate policy starting in 2015, primarily to prevent the Swiss franc from appreciating too much, which could harm its export-driven economy. However, as of September 2022, the SNB increased its policy rate to 0.5%, effectively ending the negative interest rate policy.

Denmark

Similarly, Denmark’s central bank (Danmarks Nationalbank) also had negative interest rates starting in 2012 to maintain the Danish krone’s peg to the euro. However, in September 2022, Denmark raised its interest rate to 0.65%, ending its negative rate policy.

Japan

As recently as 2023, Japan still had a rate of negative 0.01%. However, in July 2024, in a significant move, the Bank of Japan raised its key interest rate to 0.25%, in an effort to curb the yen’s sharp depreciation against the U.S. dollar. This marks a shift from Japan’s long-standing ultra-low interest and even negative interest rate policy, which had been in place for nearly a decade to combat deflation and stimulate economic growth.