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Bank accounts are only FDIC insured (or equivalent) up to some limit. If you have hundreds of millions and would otherwise stuff that in a bank account buying bonds are a safe alternative to get around that limit.


That doesn't really make sense, because if you have hundreds of millions of dollars you can just hold the money yourself.


Vaults cost money. Insurance costs money. And it's still not quite as safe. The ability to hold the money yourself acts as a soft cap on how negative rates can be, but that cap is not at 0%.


OK, but is that really who is buying all these bonds?


Yes, institutional money is driving push into bonds, not retail investors/individuals.


Thanks. That clarifies this for me!




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