Bank of England economist proposes national digital currency

The Bank of England’s top economist believes a digital currency based on Bitcoin could alleviate monetary policy issues.

Andrew Haldane, chief economist and executive director of monetary analysis and statistics at the Bank of England, spoke at the Porta Chamber of Commerce in Northern Ireland on September 18. During the speech, Haldane proposed several monetary policies that central banks can use when interest rates are close to or below zero.

Haldane said the central bank believed measures similar to quantitative easing would become a permanent part of its policy tools, but he warned that this could lead to a crisis of confidence in the central bank.

He then proposed a solution, suggesting that the Bank of England issue a national digital currency based on Bitcoin. Supporting this move would result in negative interest rates on paper money compared to digital currency. But Haldane believes that paper money should be banned altogether.

On the topic of Bitcoin, Haldane cited central bank data that shows the growing dominance of Bitcoin and, more broadly, blockchain-based transaction systems. He said in his speech:

“ I think it’s now fairly clear that decentralized payment technology as embodied by Bitcoin has real potential. It clearly solves a thorny problem in monetary economics: how to establish trust in money across decentralized networks. Bitcoin’s blockchain technology seems to offer an imaginative solution to the decentralized trust problem. ”