“ I doubt banks are deliberately charging high rates with the intention of sabotaging businesses. It just doesn't make business sense. It would make more business sense to see it as monetising insights as it is about capital. It makes more business sense that banks' relationships with the customers is to provide not only financial capital but intellectual capital by providing insights on what's happening in the market place (in the sense of yield & returns etc).
Lower rates can be less effective in forcing businesses to seek out more productive investment options. There are operational risks where not all financial institutions have the system ability to provide lower interest rates. There are credit risks of whether our economy after becoming used to low interest rates would cope with rate increases as and when it comes. What will central banks do if inflation suddenly starts to take off? there may be an increase in bad debts as borrowers struggle to cope with higher funding costs.
If low rates are imposed, it may compel banks to paying more to replace higher yield portfolios they are currently carrying. As more cheaper debt matures it is replaced by more expensive (lower yield) debt to keep regulators satisfied. The amount of debt, while at low rates, grows in real terms and the financial sector is exposed to greater credit risk. The financial implications that may cripple the banking system here.
But then again that's probably the govt's intention. ”