Negative interest rate

Okay kiddo, you know how when you borrow money from me, you have to pay me back more money than you borrowed, right? That extra money is called "interest".

Well, sometimes, when the economy is not doing well, the grown-ups who run the banks might decide to lower the interest rate so that people will want to borrow more money and spend it on things like buying toys or cars. This is like giving you a discount on how much extra money you have to pay me back when you borrow from me.

But sometimes even that is not enough to get people to spend more money. So the grown-ups might decide to do something even more unusual: they might make the interest rate negative.

What does that mean? Well, it means that instead of me giving you a discount on your interest, I would actually pay you some money for borrowing from me. Kind of like if you borrowed some toys from a friend and they gave you money for it instead of you having to pay them for it.

It might seem weird, but this can actually be a good thing for the economy. When people borrow money and have to pay less in interest or even get paid to borrow, they are more likely to spend it and that can help businesses make more money and create more jobs.

But don't worry, I won't be making your piggy bank have negative interest rates anytime soon! We'll just stick to our regular deal of you paying me back with a little bit of extra money, okay?