The discussions negative interest rates of Bank of England (BoE) would drive Bitcoin adoption

According to Bloomberg, during a meeting that took place yesterday, the Bank of England gave the clearest signal yet that it may consider cutting interest rates below zero for the first time in its history as the economy faces a surge in coronavirus infections and the risk of a no-deal Brexit. And this must be in Bitcoin favor.

Bitcoin was once again promoted as the Bank of England discussed negative rates

According to the results of the meeting, with multiple threats to the outlook looming, the BOE will begin structured engagement with U.K. bank regulators on how it might implement negative rates. In terms of negative rates, which means that institutions lend money and, therefore, savers have to pay to hoard cash. Even so, the bank is leaving all options on the table, due to heightened uncertainty.

Before Thursdays’ decision, economists were already forecasting that bond purchases would be expanded by 50 billion pounds ($ 64.4 billion) in November, and market pricing pointed to rate cuts next year. The BOE kept its benchmark rate at 0.1% for now, and the bond-buying program at 745 billion pounds. Later, the pound slipped against major currencies on Thursday, as policymakers further confirmed that they have voted to keep interest rates at 0.1% for the time being.

discussions-negative-interest-rates-of-bank-of-england-boe-would-drive-bitcoin-adoption

Bank of England balance sheet chart (GBP) | Source: TradingEconomics / Bank of England

A dive into sub-zero rates would put the BOE on a path already taken by some European peers and the BOJ, giving it some clues on how to best structure the policy. The European Central Bank, with a policy rate of minus 0.5%, has offered banks partial exemptions to ease the pain of the policy.

Negative rates work as a charge on the deposits that banks keep at the monetary authority. Exemptions try to counter concerns that lenders, easily to pass that cost onto savers, will pull back on credit to the real economy. The ECB also offers long-term funding to banks at an ultra-low interest rate if they use that cash for loans.

Supporters of Bitcoin immediately caught up with BoE’s troubles. Such a policy undermines both its reputation and its position, they argue.

BoE is incredibly popular among Bitcoin; the U.K. government bailed out the banking sector shortly before Bitcoin was born in 2009. More recently, central banks’ reaction to Coronavirus has spurred the will thought that Bitcoin would increasingly act as a hedge against fiat.

This week, the U.S. Federal Reserve issued queries on plans to go beyond inflation targets, a process that would weaken the U.S. dollar and potentially create a further boost for safe havens like gold and Bitcoin.

For her part, BoE has stated that negative rates will damage the U.K. economy as recently as last month.

The European Central Bank has been managing negative interest rates since 2016, but such a move would be the first in history for the U.K.

Read more:

Follow us on Telegram

Follow us on Twitter

Follow us on Facebook

You might also like

LATEST NEWS

LASTEST NEWS