How negative can interest rates go?

Sweden’s Riksbank cut interest rates into negative territory this month, following in the footsteps of the Danish and Swiss central banks and the ECB. Although central bankers are instinctively cautious in setting policy, rates are likely to be cut even further in the coming months. We suspect that the lower bound on deposit rates is further below zero than many commentators presume, not least because the risk that commercial banks begin to hoard cash in the form of physical notes and coins is small.