When the European Central Bank introduced a negative interest rate on lenders’ deposits two years ago, few thought things would ever go this far.This week, a German cooperative savings bank in the Bavarian village of Gmund am Tegernsee — population 5,767 — said it’ll start charging retail customers to hold their cash. From September, for savings in excess of 100,000 euros ($111,710), the community’s Raiffeisen bank will take back 0.4 percent. That’s a direct pass through of the current level of the ECB’s negative deposit rate.“With our business clients there’s been a negative rate for quite some time, so why should it be any different for private individuals with big balances?,” Josef Paul, a board member of the bank, said by phone on Thursday. “As it looks today, charges on deposits won’t be extended to customers with lower amounts” than 100,000 euros, he said.Let’s put on some tinfoil for a hat and consider the fact that maybe President Mario is aware that banks will shift the rate downstream.Citizens may accept not getting interest from their savings, but I don’t think they’d accept PAYING to save. So, citizens will start withdrawing money from the banks and saving it under their mattress, etc. Because banks (I don’t know how it is in Europe, but in the States…) are limited on how much they lend by how much they have in reserves, banks will find that their real profit stream, lending, is being hurt.The response to this will probably be to eliminate the fractional reserve requirement – just go wild lending! We need ANY market activity! However, I can see also implementing some sort of law against owning cash. Penalizing paper currency by requiring it to be stamped once a year to be legal tender, etc. Lots of economists have thought long and hard about how to do away with the Zero Lower Bound for ages, and they all sound terrifying-cash is an essential protection for a free economy.I have a hard time imagining the banking chiefs consider the fact that maybe the Phillips Curve is a busted model. To do so would mean banks do not have the power to avoid recessions indefinitely, and banks are ubermensch.