When negative rates become a zero sum game

That is the title from the FT today,

As for monetary policy, there is a clear concern that the latest weapon in central banks’ armoury — the adoption of negative interest rates — may amount to little more than a new way to wage an old-fashioned, beggar-thy-neighbour currency war.

In addition, without cooperation the policy is a zero sum game,

Mr Carney therefore argues that there are limits to what the latest burst of innovation by central banks can achieve. If they craft policies in ways that shield retail customers, negative rates are unlikely to do much to stimulate domestic demand. Instead, the main effect will be on the exchange rate.

This is attractive to the country concerned but it rapidly becomes a zero sum game, since “for monetary easing to work at a global level it cannot rely on simply moving scarce demand from one country to another”.