Central Bank Monetary Policy Will Do More Harm Than Good
Forecasting how the global economy will evolve is becoming all but pointless. Anyone can create their own forecast and be right up to a certain extent, but the long-run scenario is impossible to guesstimate right now. Bitcoin users have no love lost for central bankers, and vice versa. Many central banks use rather unconventional monetary policy tools, which is causing friction within the banking sector itself. Something will have to change, as the advantages of Bitcoin and digital currency over central banks become more apparent every day. When people in the Bitcoin world hear the term....
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The root cause of this problem is how a central bank is the “only player in town” to address economic turmoil. One thing most financial experts seem to agree on these days is how central banks find themselves in a precarious position. The Federal Reserve is sharing that opinion, as they feel central bank policy is doing more harm than good. In fact, 70% of bankers believe the monetary policy is a thing of the past. Central banks are on very thin ice, and more cracks start to appear every single day. Central banks have been using some interesting monetary policy options for several decades....
Following the latest meeting of the monetary policy committee, the Central Bank of Nigeria says it has hiked the monetary policy rate to 15.5%. By increasing the key interest rate by 150 basis points, the central bank hopes to “narrow the negative real interest rate gap and rein in inflation.” The rate increase came just days after the naira’s parallel exchange rate against the dollar plunged to a new low. Narrowing the Negative Real Interest Rate Gap According to the Central Bank of Nigeria (CBN), members of the bank’s monetary policy committee (MPC) have....
A research consultant for Canada's central bank has published a new research paper that envisions a world that has established a monetary standard based on bitcoin. The outcome, speculates author Warren Weber, would be a mix of good and bad in terms of impact on monetary policy. Weber writes: “A bitcoin standard would have two major benefits over current fiat money standards. One is that there would be greater price-level predictability due to the known, deterministic rate at which new bitcoins are created. A second is that the resources currently devoted to hedging against fluctuations in....
The European Central Bank is finally launching its major quantitative easing (QE) in order to fight the euro zone’s slide towards deflation. But with the evident failure of this monetary policy so far and the emergence of negative interest rates, is the ECB creating the perfect storm for virtual currencies as a viable alternative? From March this year until September 2016 the ECB will buy €60 billion (US$68 billion) of assets a month, a total of €1.1 trillion over the given period. Moreover, the President of the ECB, Mario Draghi, left room to extend the program if necessary. The ECB has....
Raghuram Rajan, the governor of the Reserve Bank of India, questions the unconventional monetary policies central banks are pursuing and claims that pushing down interest rates results in people saving rather than spending. Rajan’s views echo those who criticize central bank policies, which have included restraining digital currencies. On leave from a teaching post at the University of Chicago, Rajan offered his insights during the International Monetary Fund (IMF) spring meeting in Washington, D.C. in an interview with MarketWatch. A persistent critic of Fed quantitative easing, Rajan....