How are negative interest rates implemented?
The desired effect of negative interest rates is that commercial banks more readily give out loans to businesses, rather than just keeping their reserves idle, as the potential returns from successful lending are better. The idea is to inject more money in circulation and stimulate economic growth.
The reason for this is that banks within a banking regulation/currency area is a closed system - reserves are created when a loan is made, and cannot be removed from the system until that debt is repaid. A bank can store it in actual cash or in reserves in another bank, but that would simply move the problem to that bank. They need to be able to store their reserves, and they end up doing that at the central bank.
Obviously, both banks that are involved adjust their databases to reflect the change in balances. But now your bank owes you less, and the other person's bank owes their customer more. This is only fair if some form of settlement occurs between the banks.
In principle, this settlement could happen in cash, but that would be extraordinarily wasteful (because of the overhead of handling cash). You really want some form of electronic settlement.
As a first approximation, the electronic inter-bank-settlement works by all banks having an account at the central bank, and transactions at the consumer level are reflected by corresponding transactions at the level of central bank accounts. (Obviously, reality is more complicated both because it makes sense to aggregate lots of small transactions into a few bigger ones, and because the whole system has grown organically without anybody designing it from first principles.)
It sounds like the idea here is the ECB will loan money to banks at negative interest as long as those funds are loaned out to certain types of borrowers.