US Negative Interest Rates Policy Checklist

The U.S. Negative Interest Rates Policy Checklist describes how certain capital markets products may be impacted in the event of a U.S. negative interest rate policy, followed by a checklist of considerations that can be used by firms seeking to mobilize negative interest readiness programs within their institutions. The checklist, published by SIFMA and EY, is structured across the following key themes: U.S. negative interest rate program governance and mobilization; financial exposure analysis; contract and counterparty customer analysis; portfolio strategies and profitability; technology and operations; finance, tax and accounting; and regulatory and policy considerations.

 

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Introduction

The potential impact of a negative interest rate (NIR) policy in the U.S. continues to be discussed by market participants. Federal Reserve Chairman Jerome H. Powell has previously stated that the U.S. does not see negative interest rates as an appropriate policy response to economic disruption caused by the pandemic. However, the uncertainty of U.S. economic recovery and the current 0% to 0.25% monetary policy target range for the federal funds rate continues to lead market participants to consider the future possibility of a NIR policy in the U.S.

SIFMA’s Operations & Technology Committee has formed a U.S. Negative Interest Rates Readiness Working Group (Working Group) that has developed a U.S. NIR readiness checklist. The checklist was developed through discussions between Working Group members. The objective of the checklist is to assist SIFMA member firms with planning for the potential of a negative interest rate policy in the U.S., accelerate readiness, and mitigate the risk of disruption to business activities and investors.