WSJ report says CBDCs could lead to ‘deeply negative interest rates’
A report by Wall Street Journal claimed that CBDCs may result in a negative impact against cash.
In the present time, blockchain adoption and blockchain based central bank digital currency trend is in light, after El Salvador Bitcoin law. But there are many negative factors of CBDCs which are still a problem in the books. Future will tell clearly whether it will give a negative result or only positive. A latest report of the Wall Street Journal shared their opinion on CBDCs negative interest system.
Read also: ‘CBDCs Are A Threat To Human Freedom : Former Google Software Engineer
On 8 September, a report was published by the WSJ on CBDCs. Report totally took the reference of the interest system of CBDCs.
Author of that report is senior columnist James Mackintosh. James argued that if the interest rate will fall below zero then we have to give light to distinguish CBDCs and Cash. If CBDCs will give zero interest, then people would like to earn zero interest by holding Cash instead of CBDCs, issued by the Central bank government.
It means the Central bank will generate huge interest and that can’t be hidden by the Central bank under the mattress.
Further James emphasized that lower or zero interest is a last option in certain circumstances where banks can use to pay the debt of borrowers.
According to Federal Reserve Economic Research, the current interest rate is 0.25%, which is very low. And also we know that the interest rate was zero when the market crashed in the pandemic situation in the World.
The head of the Bank for International Settlements’ Innovation, Benoît Coeuré, shared his point of view on this matter with the WSJ and said that the Central Bank is working to introduce CBDCs not to be seen as “a possible monetary-policy instrument.”
“Negative rates aren’t easy to understand. There will be a reluctance both by central banks and financial institutions to go there”
Mackintosh also added that electronic money, provided by the Central bank with interest rates, is better and able to give enough freedom.
Read also: El Salvador’s Bank to Support Bitcoin Loans with multiple services
