Equestrian statue of the Duke of Wellington in front of the Bank of England. Source: Adobe/fazon

There is a general consensus that the global economy is heading for a sharp recession. The economic output will contract, but there are, at least, certain innovations that can be implemented to mitigate the situation.

Central banks have already slashed interest rates and begun quantitative easing in the US, the UK, and the EU. But there’s something that could ease (or at least lubricate) the global financial situation even further: central bank digital currencies (CBDCs) and cryptocurrencies.

According to central banks themselves and to economists, CBDCs can make the monetary system faster and more efficient, while also increasing financial inclusion and reducing the scope for money laundering and tax evasion. At the same time, even though central banks themselves are unlikely to use decentralized cryptocurrencies, these could also play a positive macroeconomic role in the future.

CBDCs: faster, more accessible money

Back in 2016, the Bank of England published a working paper in which it detailed the macroeconomic consequences of issuing a CBDC. Most notably, it concluded that…

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Author: Simon Chandler


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