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ZURICH—The top two executives at Swiss banking giant UBS Group AG teamed up Tuesday to blast the negative interest rate environment brought on by the easy money policies of central banks, an indication that patience is wearing thin in some quarters over these emergency measures.

"The introduction of negative interest rates—now not only in Switzerland, but also in large parts of Europe and in Japan—is an extraordinary measure and should only be used in extraordinary times," said UBS Chairman Axel Weber in remarks to the bank's annual shareholders meeting.

"We can all only hope that the times of such drastic measures by the central bank pass as quickly as possible," said Mr. Weber, a former Bundesbank president who has been critical in the past about negative interest rates. "Unfortunately, I have to say, unfortunately, there is little indication that negative interest rates will soon be a thing of the past."

Faced with very low inflation, or even falling prices, more central banks have resorted to negative rates on bank deposits stored with them. Switzerland's central bank has been particularly aggressive with this tool, having maintained a -0.75% deposit rate since January 2015. Central banks in the eurozone, Denmark, Sweden and Japan have also gone this route.

One consequence of negative rates is that they make a country's assets less attractive to investors, which may weaken the currency and boost both exports and prices of imported goods.

But it poses problems for financial institutions that face penalty rates from their central banks while being constrained from passing negative rates on to retail customers.

"Because of low and even negative interest rates, we and the whole industry are now presented with a frankly absurd question: do we still really want to take on client assets when doing so costs the bank money—and when we have to back up liquid assets with an unreasonably large amount of capital?" said UBS Chief Executive Sergio Ermotti. "I have my doubts as to whether this is good for the financial system and the economy."

Mr. Ermotti noted that UBS has already been forced to pass along negative rates to businesses and increase the rates it charges on some loans. "If the conditions remain as they are or grow worse, we will have to consider extending these measures to very wealthy clients and increasing interest rates on loans yet higher," he said.

Write to Brian Blackstone at brian.blackstone@wsj.com

(END) Dow Jones Newswires

May 10, 2016 07:55 ET (11:55 GMT)

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