A shift from paper to virtual cash will empower central banks
Officially issued digital currencies could help usher in negative interest rates
AMERICA’S FEDERAL RESERVE recognised the disruptive potential of electronic money long ago. “This is a service which it is expected will be more and more availed of as the ease and economy of using it are understood,” its New York arm declared in a report. The year was 1917, and the Fed had just started allowing banks to transfer funds by telegram free of any interest charge. More than a century on, central banks are grappling with another technological revolution: the rise of mobile payments and the turn away from cash.
This article appeared in the Finance & economics section of the print edition under the headline “Bips and bytes”
Finance & economics July 25th 2020
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