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According to the chief economist at the bank of England, crypto could become a part of the new monetary order

According to the chief economist at the bank of England, crypto could become a part of the new monetary order

Quick take

1 minute read

  • The Bank of England is seemingly getting ready to expand its horizons as it looks into the world of digital currency. 
  • The bank is assessing the nascent asset class including how these tokens form the basis of the “new monetary order“.

The Bank of England is seemingly getting ready to expand its horizons as it looks into the world of digital currency. The bank is assessing the nascent asset class including how these tokens form the basis of the “new monetary order“.

The chief economist at the bank, Andy Haldane gave a speech earlier this week which looks into the numerous topics in relation to crypto under the world of blockchain. Particularly, the speech looked into the impact on financial stability and monetary policy. 

One particular benefit is the emergence of narrow banking. The Economist further noted:

“In principle, separating safe payments and risky lending activities could lead to a closer alignment of risk and duration on the balance sheets of those institutions offering these services.”

When it comes to policy for monetary reasons, economists said that a cryptocurrency could mitigate the prevalence of negative interest rates. Andy added that negative rates come from a technological constraint on the ability to pay or receive interest on the physical cash. He highlighted:

“In principle, a widely-used digital currency could mitigate, if not eliminate, that technological constraint by enabling interest rates to be levied on retail monetary assets.

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