BoE Releases Paper on Blockchain and Central Banking

The Bank of England (BoE) recently released a staff working paper entitled “The Macroeconomics of Central Bank Issued Digital Currencies” which discusses the consequences of a central bank making a digital form of cash available to the general public.

According to a recent Blockchain News article, the paper models a partial Sovereign Money System in which anyone can hold their money in the form of risk-free digital cash created by a central bank only when it purchases bonds from households or investors. The paper does not consider what would happen if the central bank created digital cash to finance government services or tax cuts, although it notes these questions for future research.

Some of the key benefits of digital currencies that are highlighted in the paper include: boosting the GDP by around 3 percent due to “reductions in real interest rates, in distortionary tax rates, and in monetary transaction costs…"; creating a second monetary policy tool for central bankers to stabilize the economy; and improving financial stability.

wagers
Terms and Conditions | Privacy Policy