Costs of Negative Interest Rates

James McAndrews of the Federal Reserve Bank of New York doubts the merits of negative interest rates. He lists the following types of complications:

  1. Avoidance
  2. Legal and operational frictions
  3. Economic frictions
  4. Pass-through to market rates, and retail v. wholesale
  5. Effects of negative rates on the health of financial intermediaries
  6. Signal of deflation
  7. Public acceptance