August 12, 2016
The Bank of England suggested that the University College of London’s researchers create a cryptocurrency, so they did. The RSCoin, controlled by the Bank of England, aims to make financial transactions more efficient, and could benefit global trade.
As one of the few central banks to develop its own cryptocurrency (the People’s Bank of China has done the same), the Bank of England believes that digital currencies offer monetary policy otherwise unavailable with traditional currency. The central bank’s experiment contends that this development will benefit the global trade economy at a time when interest rates are very low, or potentially negative.
Some benefits of the digital currency, according to the bank, are:
- RSCoin can grow with the economy’s growth
- The bank’s impact on money supply will be more immediate
- It can replace the U.S. dollar, as a reserve currency in global trade
If other banks follow suit and enable cryptocurrencies, the playing field could become more convoluted. But for now, the Bank of England is proposing this as a solution ripe to benefit global trade.
For comments, questions or concerns, please contact Daniella Soloway