Research papers are coming in on this

Mish reports that The Wall Street Journal reports The World Should Watch Japan’s Attempts to Save Its Struggling Banks. 

After 30 years of falling and even negative interest rates, many of Japan’s regional lenders have share prices of 0.2 to 0.3 times their book value—levels that would have been considered catastrophically low even a few years ago.

The Bank of Japan is offering commercial lenders an extra 0.1 percentage point in interest on their deposits with the central bank if they reduce their overhead ratio by certain benchmarks, or merge or integrate their businesses.

A marginal shift in interest rates on accounts held with the central bank might not sound like much, but Moody’s Investors Service rightly notes that given regional banks had an average return on assets of just 0.14% in the last fiscal year, an extra 0.1 percentage point return on large cash balances is nothing to sniff at.

Any institution that relies on interest income is going to be squeezed continually if rates remain low for an extended period, as bond market prices clearly expect them to. With less fee income, similar issues are likely to present themselves in regional lenders around the world.

No banks, no economy for the taxable currency.

 Deflation spiking, prices spiral down.  Taxes start dropping much faster than spending, and we get a meeting of the elders.