In the recent time-series of bonds issued by (for example) Germany, Austria and France we see an unfamiliar phenomenon: negative yields. This is mainly the issue on the short end of the yield curve. For a picture see: http://www.ecb.europa.eu/stats/money/yc/html/index.en.html
My question is, why banks or possibly other companies are willing to pay a government for holding their money?
Would it not make more sense to simply hold the cash instead? Stuffing cash under the mattress may be risky and costly for an individual but not for a financial institution. A bank may park money in an ECB account and get a minimal but positive overnight rate for doing so, right?