You have portrayed negative interest rates in an unrealistic manner. You seem to have disregarded who is going to be able to borrow money at a negative interest rate. It will not be commercial banking customers.

Many commercial banking customers are used to no interest on their deposits and are forced to pay fees as well. Even accounts that pay interest pay negative real interest, interest rate is less than the rate of inflation. Commercial banking customers tolerate this for the convenience of bank managed payments and receipts. Pretty much everyone accepts payments from banks and employers like to send your pay to a bank. Just try and get your employer to pay you in Bitcoin or find someone to sell you stuff if you want to pay in Bitcoin or Apple pay or some sort of mobile wallet, your choices will be limited.

Trapped I say, we are trapped. If my bank increased fees and started charging me interest on my deposits, my employer is not going to start paying me in cash or even give me a paper check and imagine the pain of trying to pay my bills with cash. I actually did that 30 years ago, it would be worth a bunch of money to avoid that. Also, I can’t imagine how could pay my credit card bills without a bank account, maybe a Money Order but they have fees too.

TEK