LONDON (Reuters) - If all you care about is getting your money back in this current period of intense uncertainty on global capital markets, then you may need to pay for the privilege -- or put another way, to accept negative interest rates.
The shrinking universe of safe-haven assets is forcing investors to pay negative rates to park cash in guaranteed custody accounts or hold assets in certain markets that are considered ultra-secure.
Bank of New York became the first custodian bank this month to charge a fee to big clients for large deposits, effectively imposing negative rates on them.
Short-term deposit and money rates in Switzerland and Singapore have also turned negative over the past week as capital has flowed in seeking safety.
"This is an uncharted territory. When you have confidence on sovereign triple-A shaken, people will be prepared to pay up for the sense of absolute security," said Rupert Howard, head of UK portfolio management
The shrinking universe of safe-haven assets is forcing investors to pay negative rates to park cash in guaranteed custody accounts or hold assets in certain markets that are considered ultra-secure.
Negative nominal interest rates occur when investors pay banks to hold their cash in an environment of low central bank interest rates, widening differences in credit health between counterparties, and extreme risk aversion.
Doubts about the quality of sovereign credit ratings, with the United States the latest country to lose its top-grade status, and concerns about the European banking system have pushed capital into secure deposit accounts and away from money markets -- traditionally a haven for wary investors.Bank of New York became the first custodian bank this month to charge a fee to big clients for large deposits, effectively imposing negative rates on them.
Short-term deposit and money rates in Switzerland and Singapore have also turned negative over the past week as capital has flowed in seeking safety.
"This is an uncharted territory. When you have confidence on sovereign triple-A shaken, people will be prepared to pay up for the sense of absolute security," said Rupert Howard, head of UK portfolio management
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