Is Financial Repression Here to Stay?

Can savers really expect the old normal in financial markets – positive long-term interest rates on government bonds – to return? There are two powerful reasons why it may be unreasonable to expect that it ever will.

LONDON – There are several definitions of financial repression – and the repressors and the repressed tend to see things differently. But what financial repression usually involves is keeping interest rates below their natural market level, to the benefit of borrowers at the expense of savers. The borrowers are often governments, and in many emerging economies the state has funded its extravagances by paying bank depositors derisory rates of interest.