Financial repression

Rules that steer savers' money into government bonds and keep interest rates below inflation, so that government debt shrinks in real terms. Tools include caps on interest rates, capital controls and requirements for banks to hold government debt.

Example

Between 1946 and 1976, UK real interest rates were negative in 24 of 30 years, according to the Office for Budget Responsibility.

Explained in

Mechanic 05How government debt grows or shrinks Mechanic 01How inflation, interest rates and bond yields fit together

Related concepts

Inflation Core inflation Inflation target Central bank Policy rate Government bond Bond yield Real interest rate

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