M
Mbotha
Member
Hi
Mathematically, it makes sense that interest would be negative on negative reserves. I'm struggling to understand it from a bigger-picture point of view though.
Since negative reserves are an asset, why is there an interest CHARGE on it? To me, this implies that negative reserves are a loan of some sort on which interest is being charged but I don't understand why and what the "loan" would be for.
Mathematically, it makes sense that interest would be negative on negative reserves. I'm struggling to understand it from a bigger-picture point of view though.
Since negative reserves are an asset, why is there an interest CHARGE on it? To me, this implies that negative reserves are a loan of some sort on which interest is being charged but I don't understand why and what the "loan" would be for.