Bank of England might just start using bitcoin or other forms of electronic money in order to bring about sustainable financial reforms in the country. It is one of the possibilities discussed during a recently held conference in Northern Ireland.
The chief economist at the Bank of England– Andy Haldane proposed the idea while addressing a gathering of business owners. Haldane is one of the leading members in Bank of England’s monetary policy committee and the views expressed by him during the speech was completely opposite to what the Bank of England’s governor Mark Carney had earlier explained.
According to Andy Haldane, The Bank of England should rather be reducing its interest rates to as low as zero percent over a period of time instead of further increasing it. During the time of economic slowdown, many economies are not faring well, which along with many other factors are forcing the Central Banks to cut their interest rates. Doing so in the current situation will stabilize the economy for the short term, but it will also end up hampering the domestic growth rate while keeping the inflation in check.
These situations require the Central Bank to take a judgement call, keeping the nation’s best interests in mind. According to Andy Haldane’s proposal, adopting a state issued digital currency similar to bitcoin will reduce the operational and maintenance issues generally connected with cash and other physical instruments currently in use. This will enable the Central Bank to reduce interest rates, without causing any significant harm to the nation’s economy while being in sync with the global economic changes.
Once reduced interest rates are achieved, policymakers can get to work and introduce a more sustainable model to ensure economic growth. However, it is just a theory at present which will take a while to be implemented if Bank of England or any other Central Bank decides to do so.