Negative rates, the (scarce) alternatives to money under the mattress

SAFETY CASSETTE, a temporary solution

They are not a lasting alternative to the account for various reasons, starting from logistic factors. "They have a cost – comments Paolo Cardena, private banker-, because to secure one million euros they pay about 6 thousand euros. As if they were subject to a negative rate of 0.6%. Then, you have to be careful when the money is brought out and deposited in the account, because it could trigger tax and anti-money laundering checks ». Also for Gianni Lupotto, CEO of Alfa Scf, «the cassettes are zero-yield solutions that involve the costs of renting. They can be useful as emergency solutions ".

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Ready against repayment terms

Repurchase agreements are an old tool that currently barely touches 0.4%. It consists of the purchase of a security from a bank, to which it is resold after a certain number of months at a fixed price that includes an interest. "However – explains Cardena – the repo / term are not a structural alternative to liquidity management. They have very short durations, are difficult to replicate and are often flirtatious instruments to convey savers on other products. With compressed rates, the underlying must move on risky issues to have fair returns ". Lupotto is equally prudent: «Some banks offer repurchase agreements with attractive returns for very short periods. However, with the exception of promotional operations below cost, the underlying securities are risky and it is the saver who takes the risk; for this reason we do not recommend these solutions. With yields of BoTs and BTps below zero for up to three years there are no low-risk and short-term profitable transactions ».