Bitcoin In The Time Of Negative Interest Rates

The Central Banks of Japan and Europe have imposed negative interest rates on deposits. Would these blunt monetary tools of Central Bankers be effective if bitcoin adoption becomes widespread?
Christine Lagarde, International Monetary Fund Managing Director, says:
“We see the recent introduction of negative interest rates by the ECB and Bank of Japan as net positives in current circumstances, though not without side effects that warrant vigilance.”
Negative interest rates are the tools of Central Banks
Negative interest rates are the emergency tools of Central Banks – they spur lending and investment in the economy when traditional measures have failed. Investors may tolerate marginal negative yields on sovereign debt because it is a safe investment, and they may be forced by their investment mandate into holding it.
However, the efficacy of negative interest rates is limited by an alternative safe asset – cold cash. Central bankers would be horrified if their monetary policy forces people to hoard cash and hence would not venture too much into negative territory.

This post was published at Coin Telegraph on 2016-04-12.

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