Are negative policy rates a plus for the world economy?

Negative interest rates have come under attack recently, but in our view most of the criticisms are over-stated. In particular, the costs of negative rates for commercial banks appear to be very small, and, despite the recent comments by the Bank for International Settlements, there is little evidence that they are having the perverse effect of pushing up borrowing costs. What’s more, it is not the case that negative rates work solely by encouraging exchange rate depreciation.