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RE: Denmark's 3rd Largest Bank Is Now Paying People To Take Out A Mortgage
Banks operate on cash flow.
If the national bonds are priced at -0.6%, banks simply need to prove future cash flow, ergo payment at x year. This allows them to yield the interest on the negative-interest national bonds. Easiest way to prove future cash flow is to create debt by punching in numbers into a screen for a big-ticket secure-value asset; homes are the go-to for this.
In the end, the government prints surplus money to cover the bank's profit. What profit? If the national bond is at -0.6% and the mortgate is -0.5%, the bank makes 0.1%. The more cash flow, ergo debt, it can create, the more money the bank makes.
Ok, that makes sense to me. Thanks for the answer!
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