The decision means that Swedish commercial banks will be able to take out loans from the central bank at a negative interest rate. When the loans are due, banks will pay back less than they borrowed.
Does that only sound crazy to me or anyone else? I've already accepted the ECB's negative interest (i. e., fees) when banks park money at it. But at least a loan is still at
positive 0.05%. So if I'm a Swedish bank, I'll just get a billion in cash, put it in my vault, pay back less and profit? How's that ever going to work out?
I don't think that is true. I tried to look up the details and from what I understand, the swedish central bank always uses the "steering interest rate" (reporänta), and either subtracts or adds 0,75% to the actual interest rates for loans, depending on which way the loan is going. So the interest rate for lending from the CB is -0.10+0.75 = 0.65%, whereas the interest rate for lending money to the CB is-0.10-0.75 = -0.85%.
I'm still not 100% sure though
Yes, that makes more sense - so the article probably has it wrong. This would be similar to the ECB's policy, then, and at least somewhat more sane.