Quick take
1 minute read
- Earlier this week on the 12th of October, the Bank of England questioned numerous banks as to how prepared they are for zero or negative interest rates.
- This comes after its announcement in September that stated that they were considering how to take rates below zero if it came to it during the current economic crisis and pandemic.
Earlier this week on the 12th of October, the Bank of England questioned numerous banks as to how prepared they are for zero or negative interest rates. This comes after its announcement in September that stated that they were considering how to take rates below zero if it came to it during the current economic crisis and pandemic.
Last month, the Bank of England said that it was looking into what this kind of move would mean in Britain. Sam Woods, a deputy governor at the bank, said the following in a letter to the financial institutions.
"As part of this work, we are requesting specific information about your firm's current readiness to deal with a zero Bank Rate, a negative Bank Rate, or a tiered system of reserves remuneration – and the steps that you would need to take to prepare for the implementation of these."
It seems that the Bank of England and lenders as to thoroughly understand the implications of such a policy as Sam went on to say “since the MPC may see fit to choose various options based on the situation at the time“. This was seemingly in reference to the monetary policy committee of the central bank. When it came to challenges of technology, Sam went on to say:
"We are also seeking to understand whether there may be potential for short-term solutions or workarounds, as well as permanent systems changes."
Well-known advocate of cryptocurrency and bitcoin, Max Keiser took to Twitter to reference the news saying:
The Bank of England can bypass banks (who refuse to lend) and simply deposit digital currency directly into people’s digital wallets. https://t.co/MEgm7hLMwt
— Max Keiser (@maxkeiser) October 12, 2020
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