{"id":9650,"date":"2021-09-10T14:01:41","date_gmt":"2021-09-10T13:01:41","guid":{"rendered":"https:\/\/coinscreed.com\/staging\/?p=9650"},"modified":"2021-09-10T14:01:51","modified_gmt":"2021-09-10T13:01:51","slug":"cbdcs-have-a-negative-effect-on-interest-rates","status":"publish","type":"post","link":"https:\/\/coinscreed.com\/staging\/cbdcs-have-a-negative-effect-on-interest-rates\/","title":{"rendered":"CBDCs could have a negative effect on interest rates – Wall Street Journal"},"content":{"rendered":"\n
Central bank digital currencies (CBDCs), according to the Wall Street Journal<\/a>, might have a detrimental impact on interest rates by providing the central bank more power over interest rate adjustments.<\/h5>\n\n\n\n
\"CBDCs<\/figure>\n\n\n\n

Senior columnist James Mackintosh\r\n \r\n \r\n \r\n <\/g>\r\n \r\n \r\n \r\n <\/clipPath>\r\n <\/defs><\/svg><\/span><\/a> suggested in his Sept. 8 article, ‘Digital Currencies Pave Way for Deeply Negative Interest Rates,' that the distinction between a CBDC and cash would be underlined if interest rates fell below zero.<\/p>\n\n\n\n

People would rather keep their actual cash in order to \u201cearn zero\u201d than risk losing money on a digital dollar issued by the central bank.<\/p>\n\n\n\n

He went on to say that if the central bank issues digital dollars that can't be buried beneath the mattress, it will have more interest rate clout.<\/p>\n\n\n\n

Negative interest rates are employed by central banks as a last resort to boost an economy during a recession by promoting borrowing and expenditure by paying interest to borrowers rather than lenders.<\/p>\n\n\n\n

According to the Federal Reserve Economic Research<\/a>, interest rates in the United States are at their lowest point in history, at 0.25 percent. During the pandemic-induced market crisis in March 2020, the Fed lowered interest rates to 0%.<\/p>\n\n\n\n

Central banks are attempting to ensure that central bank issued virtual currencies are not perceived as “a viable monetary-policy instrument,” according to Beno\u00eet Coeur\u00e9, head of the Bank for International Settlements' Innovation Hub.<\/p>\n\n\n\n

\u201cNegative rates aren\u2019t easy to understand. There will be a reluctance both by central banks and financial institutions to go there [deeply negative].\u201d<\/p><\/blockquote>\n\n\n\n

Negative interest rates could potentially be employed to fight deflation by depreciating the national currency. In this situation, the country's exports would become cheaper, while rising import costs <\/a>would drive up inflation.<\/p>\n\n\n\n

\u201cElectronic money can provide central banks more freedom with interest rates,\u201d Mackintosh concluded.<\/p><\/blockquote>\n\n\n\n

Several central banks have already moved into negative interest territory; the European Central Bank now has a rate of -0.5 percent, after initially moving to sub-zero in 2014.<\/p>\n\n\n\n

The Bank of Japan has a rate of -0.1 percent, the lowest since 2016, the Swiss National Bank has a rate of -0.75 percent, and Denmark has a rate of -0.5 percent.<\/p>\n\n\n\n

CBDCs are a type of “programmable money”<\/a> that can take agency away from the bearer, according to Wolfram Seidemann, CEO of G+D Currency Technology, who observed in July that they provide banks more leverage with interest rates:<\/p>\n\n\n\n

“Programmable money is designed with in-built rules that constrain the user. These rules could mean that money expires after a fixed date or its use is restricted to a certain set of goods.”<\/p>\n","protected":false},"excerpt":{"rendered":"

Central bank digital currencies (CBDCs), according to the Wall Street Journal, might have a detrimental impact on interest rates by providing the central bank more power over interest rate adjustments. Senior columnist James Mackintosh suggested in his Sept. 8 article, ‘Digital Currencies Pave Way for Deeply Negative Interest Rates,’ that the distinction between a CBDC […]<\/p>\n","protected":false},"author":12,"featured_media":9529,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4161,21],"tags":[774,933,4342],"class_list":["post-9650","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cbdc","category-news","tag-cbdcs","tag-central-bank","tag-wall-street-journal"],"jetpack_featured_media_url":"https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2021\/09\/ExIMF-economist-leads-Roxes-Bitcoin-backed-CBDC-project-scaled.jpeg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts\/9650","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/comments?post=9650"}],"version-history":[{"count":0,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts\/9650\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/media\/9529"}],"wp:attachment":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/media?parent=9650"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/categories?post=9650"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/tags?post=9650"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}