For example, if a the rate was negative 1% then a bank would have to pay the central bank $10,000 if they deposited $1 million with the Bank of Canada.
Depending on the length of time negative interest rates are in effect the impact on the banks could be a drop in profit.
Banks could try to offset the cost of keeping money at the Bank of Canada by reducing the deposits they keep with the Bank of Canada, increasing charges on accounts
and / or increasing user fees.
On the opposite side interest rates on savings accounts would be dropped resulting in lower returns for the consumer. Also, if the major banks want to keep their profitability up they may increase the fees and service charges associated with consumer accounts.
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