Anna Malinovskaya and David Wessel at Brookings:
Did negative rates in Europe trigger massive cash hoarding?: For a long time, economists believed that negative interest rates – charging savers to keep money in the bank instead of paying them interest – were close to impossible. If confronted with negative rates, people and institutions would hoard currency, economists reasoned. After all, earning zero interest on $500 in currency is better than paying a fee to keep $500 in the bank. Recently, however, central banks in Denmark, Sweden, Switzerland, the euro zone and Japan cut their rates below zero, testing those long-standing beliefs. ... A ... a quarter of the world’s economy is now experiencing negative interest rates as central banks seek to spur economic growth.
According to the available evidence, it doesn’t appear that cash hoarding is a problem right now in the economies with negative interest rates. ...
The most obvious reason that households haven’t begun to hoard cash is that, in most countries, negative rates haven’t affected most ordinary customers—just the banks themselves. That’s in part because of the way central banks have structured negative rates and in part because of business decisions that banks have made to shield their retail customers. Another reason is that rates are only slightly negative... That may not be enough to justify the costs involved in storing large amounts of cash – buying safes, arranging insurance and so on.
Economists agree that the longer negative rates are maintained (or the longer people believe they will be maintained), and the more negative the rates go, the more likely banks are to charge small depositors a negative rate and the more likely banks and their customers are to switch to holding cash. ... If more banks follow suit and customers begin to feel the impact of negative rates, the evidence may tell a different story.