MORGAN STANLEY: Here’s how the rise of cryptocurrencies could change the way central banks deal with future financial crises

  • Central banks are exploring the usage and creation of digital currencies following a boom in popularity of the likes of bitcoin.
  • This week, analysts at Morgan Stanley examined the possible practical uses from central banks for digital currencies.
  • Perhaps their most interesting finding was that digital currencies could be used to enable deeper negative interest rates in the next financial crisis.
  • Track the price of major cryptocurrencies with Markets Insider.

LONDON — Central banks could use cryptocurrencies to allow them to aggressively cut interest rates in the future, mitigating the impacts of any future financial crisis.

That’s according to a new report from Morgan Stanley, which dissects the possible central bank applications for digital currencies in future.

A Morgan Stanley team led by strategist Sheena Shah identified several areas of possible central bank use for crypto, but made clear that their research was “not intended to suggest where we think a digital fiat currency could be implemented or all the reasons why.”

Perhaps the most eye-catching potential application is in the area of monetary policy, where Morgan Stanley argues that digital currencies could allow central banks to take interest rates into deeper negative territory than ever before should they need to in the event of a major financial crisis.



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