A dual-currency system would make negative rates work – IMF research

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The creation of a dual-currency system would allow negative rates to become more effective in dealing with future recessions, says research published by the International Monetary Fund.

The proposal would allow central banks to transmit monetary policy faster, and shorten recessions, overcoming the limitations imposed by the zero lower bound, say authors Katrin Assenmacher and Signe Krogstrup.

In the wake of the financial crisis, central banks such as the European Central Bank, Sveriges

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